Demand - In 2025, national fixed asset investment is expected to decrease by 3.8% year-on-year, with a widening decline of 1.2 percentage points compared to January-November [18][19] - Manufacturing investment is projected to grow by 0.6% year-on-year, a slowdown of 1.3 percentage points from January-November [18] - Infrastructure investment is anticipated to decline by 2.2%, with a 1.1 percentage point increase in the rate of decline compared to January-November [18] - Real estate development investment is expected to drop by 17.2% year-on-year, with a 1.3 percentage point increase in the decline rate compared to January-November [18] - January average weekly demand for rebar is 1.82 million tons, down 12% month-on-month, while hot-rolled coil demand is 3.11 million tons, up 1% month-on-month [18][19] - February demand is expected to stagnate due to the Spring Festival holiday [18][19] Supply - In 2025, China's crude steel production is projected to be 961 million tons, a decrease of 44.22 million tons or 4.4% year-on-year [19] - Pig iron production is expected to be 836 million tons, down 25.86 million tons or 3% year-on-year [19] - January production saw a slight rebound, with molten iron production increasing by 0.55 million tons [19] - February is expected to see stable production for long-process steel mills, while electric arc furnace plants will gradually shut down for the holiday [19] Inventory - In January, inventory of the five major steel products increased by 463,600 tons, with rebar inventory rising by 535,000 tons and hot-rolled coil inventory decreasing by 153,800 tons [19] - Total inventory of the five products increased by 1.4615 million tons year-on-year [19] - February is expected to see accelerated inventory accumulation due to stagnant demand and high production levels [19] Exports - In December 2025, China exported 11.301 million tons of steel, an increase of 1.321 million tons or 13.2% month-on-month [20] - Cumulative steel exports for 2025 reached 119.019 million tons, a year-on-year increase of 7.5% [20] - The implementation of the steel product export license management system from January 1, 2026, may lead to a noticeable decline in export volumes in January and February [20] Costs - In January, iron ore prices fluctuated, while coke prices saw an initial increase followed by a decline, leading to a slight narrowing of profits for long-process steel mills and an expansion of losses for short-process mills [20] - The profit margin for 247 steel mills is currently at 39.39%, with raw material replenishment nearing completion [20] Summary - The steel market in January was characterized by weak demand and insufficient driving forces, leading to narrow price fluctuations [21] - February is expected to see increased supply pressure due to stagnant demand and high production levels, with inventory accumulation expected to accelerate [21] - The overall market sentiment remains somewhat positive due to a strong atmosphere for price increases in the commodity market [21]

Price Trends - In 2025, the average price of scrap steel is projected to be 2244.74 CNY/ton, a decrease of 222.52 CNY/ton compared to 2024. The price fluctuated between a high of 2294 CNY/ton in August and September and a low of 2175 CNY/ton in mid-January [1] - The price volatility range for scrap steel is expected to narrow, reducing market arbitrage opportunities [1] Supply and Demand - Total supply of scrap steel in 2025 is estimated at 280 million tons, an increase of 8.55% year-on-year, with a decrease in self-produced scrap and an increase in recycled and industrial scrap [2] - Scrap steel consumption in 2025 is projected to be 264 million tons, up 8.19% from 2024, with a notable increase in consumption from Hebei province, which is expected to reach 55 million tons, a 22.09% increase [2] Profitability - In 2025, the average profit for long-process steel enterprises in Jiangsu is expected to be 98 CNY/ton, a 47.7% increase from 66 CNY/ton in 2024. However, independent electric arc furnace profits are projected to be -11 CNY/ton, down from 16 CNY/ton in 2024 [3] - The average scrap ratio for long-process steel enterprises is expected to increase to 13.75%, a rise of 1.71 percentage points year-on-year [3] Imports - The import volume of recycled steel raw materials is expected to be 250,000 tons in 2025, reflecting a modest increase of 0.89% from 2024, remaining at a low level due to price discrepancies and strict customs regulations [4] 2026 Market Outlook - The scrap steel market is anticipated to continue showing a dual increase in supply and demand in 2026, influenced by policy and cost factors [5] - The utilization rate of electric arc furnace capacity is expected to improve, which will enhance scrap steel demand, while the introduction of carbon emission taxes may encourage long-process steel enterprises to increase their scrap usage [6] - The projected scrap steel consumption for 2026 is around 280 million tons, with supply expected to reach approximately 320 million tons, indicating a tight balance in the market [6]

Report Information - Report Title: Nanhua Futures Scrap Steel Industry Weekly Report - Focus on Subsequent Changes in Steel Mill Profits [1] - Report Date: August 15, 2025 [1] - Analyst: Yan Zhini [1] - Investment Consulting License Number: Z0022076 [1] Report Industry Investment Rating - Not provided in the report. Core Viewpoints - This week, the scrap steel market saw a simultaneous increase in supply and demand, with a decline in inventory and inventory-to-sales ratio, driving prices up slightly. The fundamentals of scrap steel are healthy, with strong support at the bottom, but the accumulation of steel inventory may suppress the upward movement of steel prices, and steel mill profits have also shrunk, so their willingness to raise scrap steel prices is low. It is expected that scrap steel prices will fluctuate within a range in the near future, and the spread between rebar and scrap steel may further narrow [3]. Summary by Directory Supply - This week, the scrap steel arrivals at 25 steel mills were 511,700 tons (+27,400 tons), and the average daily arrivals at Shagang were 11,800 tons (-2,700 tons) [2]. - On August 15, 2025, the scrap steel arrivals at 255 steel mills were 549,300 tons, a weekly increase of 54,841 tons; the arrivals at 132 long - process steel mills were 270,000 tons, a weekly increase of 18,891 tons; the arrivals at 89 short - process steel mills were 177,050 tons, a weekly increase of 22,800 tons [7]. Demand - This week, the daily consumption of scrap steel at 255 steel mills was 557,900 tons (+6,100 tons), with an increase in both long - and short - process steel mills [2]. - From August 7 to August 14, 2025, the daily consumption of scrap steel at 255 steel mills increased by 6,128 tons; at 132 long - process steel mills, it increased by 1,078 tons; at 89 short - process steel mills, it increased by 7,700 tons [8]. Inventory - The inventory at national processing bases decreased slightly, while the arrivals at steel mills increased. This may be due to the increase in the fear of price drops among bases after the decline in the futures market in the second half of the week, leading to the release of goods [2]. - This week, the scrap steel inventory at steel mills decreased. On August 14, 2025, the scrap steel inventory at 255 steel mills was 4,532,800 tons, a weekly decrease of 122,180 tons; at 132 long - process steel mills, it was 2,187,450 tons, a weekly decrease of 74,080 tons; at 89 short - process steel mills, it was 1,236,850 tons, a weekly decrease of 53,200 tons [2][8]. - The scrap steel social inventory decreased across the country. On August 15, 2025, the national scrap steel social inventory was 416,350 tons, a weekly decrease of 19,320 tons [9]. Price and Spread - The national Fubao comprehensive price index of scrap steel increased slightly. On August 14, 2025, the national non - tax - included scrap steel price index was 2,258.2 yuan/ton, a weekly increase of 12 yuan/ton [3]. - This week, the iron - scrap spread slightly increased, and the rebar - scrap spread significantly decreased, indicating that the cost - effectiveness of scrap steel compared to hot metal has recovered, but from a profit perspective, the cost - effectiveness of adding scrap steel has decreased, and the profits of electric arc furnaces have shrunk [2]. - On August 15, 2025, the iron - scrap spread was - 111 yuan/ton, a weekly decrease of 6 yuan/ton; the rebar - scrap spread in East China (including tax) was 769 yuan/ton, a weekly decrease of 60 yuan/ton [9]. Steel Mill Profits - This week, the profits of both long - and short - process steel mills shrank. The profits of long - process large - scale steel products still ranged from 100 to 200 yuan. The profits of short - process steel mills shrank in many regions, with only an increase in North China. Among electric arc furnaces, there were still off - peak electricity profits in Hebei and Sichuan, while there were no off - peak electricity profits in Fujian, Guangdong, Hubei, and Jiangsu, but the decline was not significant, not reaching the level of significant production cuts in electric arc furnaces [2].