Weekly Survey of Rolling Lines in Central China: Divergence in Rolling Line Production Pace and Collective Inventory Buildup

China's total steel exports in December increased by 13.24% MoM and 16.18% YoY. The reasons for such a significant increase were twofold. On one hand, following the announcement No. 79 dated December 9, 2025, by the Ministry of Commerce and the General Administration of Customs, which decided to adjust the "Catalog of Goods Subject to Export License Management (2025)" and implement export license management for certain steel products effective January 1, 2026, concerns about subsequent export uncertainties, particularly regarding the practice of forging or purchasing customs clearance documents from other import and export firms, intensified. This prompted a large number of traders to rush shipments collectively, aiming to get goods out before the year-end, leading to another surge in total volume. Furthermore, according to subsequent SMM tracking, cargo congestion occurred at multiple ports due to the rush to meet shipping schedules, and this issue has not yet been fully resolved. On the other hand, the concerted effort by most steel mills to meet annual export targets by year-end also played a key role. According to SMM production schedule data, exports of sheets & plates and long products from steel mills in December continued to grow compared to November. Simultaneously, based on SMM export order data, export orders from November to December increased by 15% compared to those from October to November, perfectly aligning with the MoM rise in total overseas exports.

Conclusion: The supply-demand imbalance has accumulated to a relatively limited extent, with relatively small room for further deterioration MoM from November. In the short term, focus on the most-traded hot-rolled coil futures contract at 3,230–3,330. In December, coupled with rising macro expectations, steel prices may have room to rise before the meeting, but the upside is likely to be limited, mainly due to persistent destocking pressure for sheets & plates and relatively weak sales performance in the market, which may also constrain a smooth price increase.

The Asian stainless steel market has traded its era of symbiotic cooperation for a brutal zero-sum game. A tidal wave of low-cost capacity from China and Indonesia has shattered the old supply chain order, forcing traditional powerhouses like Japan and Korea into retreat. As the region scrambles to cope with this structural imbalance, the response has been a sharp rise in trade barriers and protectionism. In short, the days of integrated growth are over; the new reality is a fractured landscape defined by chronic oversupply and fierce survivalism.

Last week coincided with the extended domestic Double Festival holiday. During the holiday, except for coke's first-round price increase being implemented on October 1, spot markets for most other ferrous metals series remained stable, with most markets closed for the holiday. Amid sluggish market demand, post-holiday inventories of the five major steel products accumulated significantly on a weekly basis, with the accumulation rate far exceeding that of the same period last year. On the first working day after the holiday, although futures rebounded, end-user restocking demand fell short of expectations under high inventory pressure. On the macro front, the EU formally announced the strictest-ever steel import ban on October 7, reducing the duty-free import quota to 18.3 million mt per year, down 47% from 2024, raising the tariff on excess portions from 25% to 50%, and adding new origin traceability requirements. The US also announced that starting November 1, it will impose a 25% tariff on imported medium and heavy-duty trucks...

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