The steel market may fluctuate and run weakly in January

In January, the domestic steel market may fluctuate and run weakly.

In 2025, domestic steel prices will show a volatile downward trend.
This trend will continue in January, and the domestic steel market may maintain a weak balance between supply and demand. Taking into account the policy and cost-side support, steel prices still have a certain degree of resilience and will not fall significantly.

From a supply perspective, supply growth was limited in January, which is conducive to easing the contradiction between supply and demand. At the end of the year and the beginning of the year, year-end maintenance of steel companies increases, and steel production decreases accordingly.

Data from the China Iron and Steel Industry Association shows that in mid-December 2025, the crude steel output of key steel companies reached 18.45 million tons, with an average daily crude steel output of 1.845 million tons, a ten-month decrease of 1.3%; pig iron Output reached 16.81 million tons, with an average daily iron production of 1.681 million tons, a decrease of 1.9% from the previous ten days; steel output reached 18.03 million tons, with an average daily steel production of 1.803 million tons, a decrease of 1.4% from the previous ten days. Steel production will remain at a relatively low level in January, and there will not be many resources put into the market, which will form a bottom support for steel prices.

From the perspective of demand, the off-season characteristics of the market in January are still obvious, and downstream terminal demand is weak. Considering that the Spring Festival in 2026 is late, winter storage demand and pre-Spring Festival stocking demand are expected to be released in mid-to-late January, which may lead to a slight increase in steel prices.

From a policy perspective, starting from January 1, the export license management system for some steel products will be officially implemented, which will have a multi-faceted impact on the steel market, involving supply and demand relationships, price trends, corporate behavior, international trade and other dimensions. Liang Taigeng believes that the implementation of this policy will lead to a reduction in the export of low-end steel products, which may intensify the imbalance between supply and demand to a certain extent in the short term. In the long term, it will help standardize steel export behavior. He suggested that steel companies respond to the policy as soon as possible and make corresponding adjustments.

In addition, on December 22, 2025, the Shanghai Futures Exchange and its subsidiaries Shanghai Futures Energy, Zhengzhou Commodity Exchange, Dalian Commodity Exchange, China Financial Futures Exchange, and Guangzhou Futures Exchange issued notices respectively, clarifying the reduction and exemption of delivery handling fees and other related expenses in 2026: The Shanghai Futures Exchange and Shanghai Energy, Zhengzhou Commodity Exchange, Dalian Commodity Exchange, and Guangzhou Futures Exchange will waive futures delivery fees, payment collection and payment fees for transfer of standard warehouse receipts, standard warehouse receipts as margin fees, and EFP handling fees in 2026, except for high-frequency traders recognized by the exchange.
Liang Taigeng believes that this move will help reduce the costs for all parties in the industry chain to participate in the futures market and indirectly affect the steel spot market, especially in terms of liquidity, price fluctuations and expectations. "The fee reduction directly reduces the hedging costs of steel companies, traders, etc., and more small and medium-sized participants can enter the futures market to lock in profits or hedge risks, thereby increasing transaction activity and reducing extreme price fluctuations." He believes.