Winter Stockpiling Dilemma: To Stock or Not? Steel Traders Choose Caution Amid Glut

I. Summary of Winter Stockpiling Policies for Steel Mills Nationwide
As winter approaches, construction at downstream sites is nearing the end of 2025, and market demand is weakening. To stabilize production pace, digest inventories in advance, ease financial pressure, and lock in market demand, steel mills have recently rolled out their winter stockpiling policies. According to incomplete statistics from SMM, as of December 5, one mill in Northeast China, two in Northwest China, and one in North China have announced their winter stockpiling policies.

II. Winter Stockpiling Dilemma: Should Traders Stockpile or Adopt a Wait-and-See Approach?
In recent years, the real estate market has remained sluggish, and the supporting capacity of infrastructure has been limited. Post-Chinese New Year holiday demand recovery has been weaker than expected, resulting in minimal gains or even losses for traders from winter stockpiling. Consequently, they are approaching winter stockpiling for 2026 with greater caution. According to SMM surveys, market feedback generally indicates that this year's winter stockpiling activity is expected to occur later. Most traders report that only a small number of mills have announced policies so far, which lack clear reference value, leading them to maintain a wait-and-see stance for now.

III. Inventory Levels Higher Than Last Year, Deepening Winter Stockpiling Concerns
As of December 4, total national rebar inventory stood at 4.7605 million mt, up 15.56% YoY. This includes social inventory of 3.3294 million mt, up 22.60% YoY, and in-factory inventory of 1.4312 million mt, up 1.94% YoY. From an inventory perspective, total rebar inventory, along with mill and social inventories, are all higher than the levels seen during the same period last year. Inventories remain at a relatively high level, creating significant inventory pressure and adding to traders' concerns regarding winter stockpiling.

IV. Real Estate Drag: Consensus That Demand Is Unlikely to See Incremental Growth
In the real estate sector, 2025 is a year of industry adjustment and structural transformation. From January to October, cumulative year-on-year figures for development investment, new construction starts, completed area, and floor space under construction were -14.7%, -19.8%, -16.9%, and -9.4%, respectively. The downturn in real estate is dragging down demand for construction steel. In 2026, the real estate market will continue to focus on reducing existing inventory, urban renewal, and the construction of affordable housing. Rigid demand is unlikely to support incremental growth in construction steel demand.

In the infrastructure sector, the Two Sessions in 2025 confirmed the issuance of 4.4 trillion yuan in local government special bonds, effectively filling funding gaps for infrastructure projects and providing a strong boost to the sector. From January to November, the cumulative issuance of local government bonds in China reached 4,456.3 billion yuan, up 11.9% YoY, supporting demand for steel used in infrastructure. As 2026 marks the start of the 15th Five-Year Plan period, the infrastructure sector is highly likely to see intensive policy implementation and the concentrated commencement of major projects, which should continue to provide some support for construction steel demand. Overall, with the Politburo meeting imminent and the US Fed's interest rate cuts yet to materialize, macro expectations remain positive, and both rebar futures and spot prices are strengthening. Market focus is more on profit-taking at highs, making it premature to discuss winter stockpiling. Additionally, few steel mills have announced winter stockpiling policies so far. Due to poor returns from winter stockpiling in recent years, traders are expected to make more cautious decisions. Fundamentally, rebar inventory pressure persists, the downturn in the real estate sector is expected to continue through 2026, and infrastructure support remains limited, adding to traders' concerns about winter stockpiling. It is anticipated that traders' winter stockpiling volume may decline in 2026, with close attention on the incentives in subsequent steel mill winter stockpiling policies. SMM will continue to track updates on steel mills' winter stockpiling policies.