October 16, 2025 12:00 AM GMT Steel | North America Views From the Trenches #26: Soft Demand Yet Little Downside to Prices The view of the executive we hosted: Prices will remain Industry View In-Line relatively muted over the next 6 months as soft demand counters an anticipated fall in imports. Market dynamics are likely to improve in 2Q26 as inventories fall and steel consumption rises due to interest rate cuts & OBBBA tax benefits. Morgan Stanley's Americas Metals & Mining team hosted a lunch with a stee ...

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the **steel industry in China**, tracking high-frequency demand trends and production data [1][2]. Core Insights - **Production Data**: - Total steel production in China for the week of September 12 to September 18 was **8.6 million tons (mt)**, reflecting a **-0.2% week-over-week (WoW)** change and a **+5.9% year-over-year (YoY)** increase. - Breakdown of production: - Rebar: **2.1 mt**, -2.6% WoW, +6.3% YoY - Hot Rolled Coil (HRC): **3.3 mt**, +0.4% WoW, +8.4% YoY - Cold Rolled Coil (CRC): **0.9 mt**, +0.8% WoW, +0.8% YoY - Year-to-date total steel production reached **326 mt**, +0.7% YoY [1]. - **Inventory Levels**: - As of September 18, China's steel inventory stood at **15.2 mt**, +0.3% WoW, +9.9% YoY. - Inventory composition: - Steel mills: **4.2 mt**, -0.3% WoW, +4.7% YoY - Traders: **11 mt**, +0.6% WoW, +12.1% YoY - Specific inventory for rebar, HRC, and CRC: - Rebar: **6.5 mt**, -0.5% WoW, +39.7% YoY - HRC: **3.8 mt**, +1.3% WoW, -10.4% YoY - CRC: **1.5 mt**, +1.4% WoW, -16.7% YoY [1]. - **Apparent Consumption**: - For the week of September 12 to September 18, apparent consumption of steel was **8.5 mt**, +0.9% WoW, +0.7% YoY, but down **-6.9% YoY** on a lunar calendar basis. - Breakdown of apparent consumption: - Rebar: **2.1 mt**, +6% WoW, -5.6% YoY - HRC: **3.2 mt**, -1.3% WoW, +3.6% YoY - CRC: **0.8 mt**, -1% WoW, -4.3% YoY - Year-to-date apparent consumption totaled **322 mt**, +2.3% YoY [2]. Additional Insights - The report indicates a cautious market expectation regarding demand recovery, with a pecking order of demand recovery for various materials: **copper > battery > gold > aluminum > cement > steel > lithium > thermal coal** [1]. - The data suggests a mixed outlook for the steel industry, with production and consumption showing some growth but also indicating volatility and potential challenges in specific segments [1][2]. This summary encapsulates the key points from the conference call regarding the steel industry in China, highlighting production, inventory, and consumption trends along with market expectations.

Summary of Key Points from the Conference Call Industry Overview Basic Materials - China - **Copper and Gold Prices**: LME copper price increased by 1.1% WoW to US$9,822/t, while the China price rose by 0.6% WoW to RMB79,450/t, driven by expectations of a rate cut [1][33]. - **Aluminum Prices**: LME aluminum price decreased by 0.3% WoW to US$2,618/t, with the China price slightly increasing by 0.1% WoW to RMB20,730/t [1][44]. - **Gold Prices**: COMEX gold spot price rose by 1% WoW to US$3,407/oz [1][52]. - **Lithium Prices**: Average price of domestic battery-grade lithium carbonate fell by 5.1% WoW to RMB79.7k/t, while lithium hydroxide decreased by 0.8% WoW to RMB76.9k/t [1][56]. Steel Industry - **Steel Prices and Margins**: Rebar price decreased by 0.1% WoW to RMB3,266/t, while HRC price increased by 0.3% WoW to RMB3,466/t. Iron ore price rose by 3% WoW due to expectations of a lower Fed rate [2][64]. - **Cash Margins**: Spot rebar cash margin shrank by RMB55/t WoW to -RMB34/t, and HRC cash margin decreased by RMB28/t WoW to -RMB125/t [2][75]. - **Inventory and Consumption**: Finished steel products inventory increased by 1.9% WoW to 14.7 million tons, and apparent consumption rose by 0.6% WoW to 8.6 million tons [2][85]. Cement Industry - **Cement Prices**: Average national cement price increased by 0.35% WoW to RMB327/t, with a notable increase in Ningxia by RMB30/t [3][88]. - **Demand and Inventory**: Nationwide shipment ratio decreased by 0.6ppt WoW to 41.6%, while inventory ratio was at 60.5%, down 1.1ppt WoW [3][21]. Glass and Paper Industries - **Glass Prices**: National average float glass price decreased by 1.34% WoW to RMB1,189/t due to weak demand [3][99]. - **Paper Prices**: Paper price increased by 0.7% WoW to RMB3,481/t, supported by price hikes from paper mills [3][100]. Solar Materials - **Polysilicon Prices**: N-type polysilicon and granular silicon prices increased by RMB1/kg WoW to RMB51/kg and RMB47/kg, respectively [3][110]. - **Solar Glass Prices**: Prices for coated solar glass remained stable at RMB18.8/sqm and RMB11.0/sqm [3][122]. Additional Insights - **Inventory Trends**: Lithium carbonate inventory at smelters decreased by 11% to 52kt, while downstream inventory increased by 13% to 46kt, leading to a total sample lithium carbonate inventory increase of 3.6% MoM to 142kt [1][60]. - **Market Dynamics**: The steel industry is facing pressure from rising iron ore prices, while the cement market shows signs of recovery despite regional demand declines due to environmental inspections [2][88]. This summary encapsulates the key points from the conference call, highlighting the performance and trends across various sectors within the basic materials industry in China.

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the **China Materials** industry, specifically the **steel sector** and its demand trends in China [1] Core Insights and Arguments - **Demand Recovery Expectations**: Market expectations for a demand recovery in the steel sector remain cautious, with the current sector pecking order being aluminum > steel > copper > thermal coal > battery > gold > lithium > cement [1] - **Steel Production Data**: - For the week of August 15 to August 21, total steel production in China was **8.8 million tons (mt)**, reflecting a **0.7% week-over-week (WoW)** increase and a **13.6% year-over-year (YoY)** increase. - Breakdown of production: - Rebar: **2.1 mt** (-2.6% WoW, +33.7% YoY) - Hot-Rolled Coil (HRC): **3.3 mt** (+3.1% WoW, +4.8% YoY) - Cold-Rolled Coil (CRC): **0.9 mt** (-0.1% WoW, +12.6% YoY) [1] - **Year-to-Date Production**: - Total steel production from the beginning of the year to date was **291.4 mt**, showing a **0.1% YoY decrease**. - Year-to-date production breakdown: - Rebar: **72.6 mt** (-1.8% YoY) - HRC: **108.8 mt** (+0.7% YoY) - CRC: **29.4 mt** (+2.6% YoY) [1] - **Steel Inventory Levels**: - As of August 21, China's steel inventory stood at **14.4 mt**, which is a **1.8% WoW increase** but a **12.2% YoY decrease**. - Inventory breakdown: - Steel mills: **4.2 mt** (-0.3% WoW, -5.4% YoY) - Traders: **10.2 mt** (+2.7% WoW, -14.8% YoY) - Total inventory of rebar, HRC, and CRC was **6.1 mt**, **3.6 mt**, and **1.4 mt** respectively, with varying changes WoW and YoY [1] - **Apparent Consumption**: - For the week of August 15 to August 21, apparent steel consumption was **8.5 mt**, a **2.6% WoW increase** and a **2.7% YoY increase**. - Breakdown of apparent consumption: - Rebar: **1.9 mt** (+2.6% WoW, -2.3% YoY) - HRC: **3.2 mt** (+2.1% WoW, +0.8% YoY) - CRC: **0.9 mt** (+1.7% WoW, +8.2% YoY) [1] - **Year-to-Date Apparent Consumption**: - Year-to-date apparent consumption was **288.4 mt**, reflecting a **0.1% YoY decrease**. - Breakdown: - Rebar: **70.5 mt** (-3.7% YoY) - HRC: **108.3 mt** (+1.6% YoY) - CRC: **29.5 mt** (+4.8% YoY) [1] Additional Important Information - The report utilizes data from **Mysteel**, a key source for steel market information in China [1] - The analysis indicates a mixed outlook for the steel industry, with some segments showing growth while others are declining, highlighting the need for careful monitoring of market trends and inventory levels [1]

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the **steel industry** in China, tracking high-frequency demand trends and production data [1] Core Insights - **Production Data**: - Total steel production in China from August 1 to August 7 was **8.7 million tons (mt)**, reflecting a **0.2% week-over-week (WoW)** increase and a **10.9% year-over-year (YoY)** increase. - Breakdown of production: - Rebar: **2.2 mt** (+4.8% WoW, +31.2% YoY) - Hot-Rolled Coil (HRC): **3.1 mt** (-2.4% WoW, +3.7% YoY) - Cold-Rolled Coil (CRC): **0.9 mt** (-1.3% WoW, +6.1% YoY) [1] - **Year-to-Date Production**: - Total steel production from the beginning of the year was **274 mt**, down **0.8% YoY**. - Year-to-date production breakdown: - Rebar: **68.2 mt** (-3.4% YoY) - HRC: **102.3 mt** (+0.5% YoY) - CRC: **27.7 mt** (+2.2% YoY) [1] - **Inventory Levels**: - As of August 7, China's steel inventory stood at **13.8 mt**, up **1.7% WoW** but down **20.2% YoY**. - Inventory breakdown: - Steel mills: **4.1 mt** (+0.8% WoW, -12.3% YoY) - Traders: **9.6 mt** (+2.1% WoW, -23.1% YoY) - Rebar: **5.6 mt** (-22.7% YoY) - HRC: **3.6 mt** (-18.5% YoY) - CRC: **1.4 mt** (-24.3% YoY) [1] - **Apparent Consumption**: - For the week of August 1 to August 7, apparent consumption was **8.5 mt**, down **0.7% WoW** but up **4.6% YoY**. - Lunar calendar consumption showed a **5.6% YoY** increase. - Breakdown of apparent consumption: - Rebar: **2.1 mt** (+3.6% WoW, +10.5% YoY) - HRC: **3.1 mt** (-4.3% WoW, +2.6% YoY) - CRC: **0.9 mt** (-2.7% WoW, -0.2% YoY) [1] - **Year-to-Date Apparent Consumption**: - Total apparent consumption year-to-date was **271.2 mt**, down **0.4% YoY**. - Breakdown: - Rebar: **66.7 mt** (-3.8% YoY) - HRC: **101.7 mt** (+1.2% YoY) - CRC: **27.8 mt** (+4.0% YoY) [1] Additional Insights - The report indicates a cautious market expectation regarding demand recovery in the steel sector, with a pecking order of demand recovery being aluminum > steel > copper > thermal coal > battery > gold > lithium > cement [1] This summary encapsulates the key data and insights from the conference call regarding the steel industry in China, highlighting production, inventory, and consumption trends.

Investment Rating - The report has shifted its near-term investment pecking order to prioritize steel over other materials, indicating a positive outlook for the steel industry [1]. Core Insights - Market expectations for a demand recovery in China remain cautious, with a focus on tracking high-frequency on-ground demand trends [1]. - Steel production in China has decreased by 2.4% week-over-week (WoW) and 4.3% year-over-year (YoY) for the week of June 6 to June 12, totaling 8.6 million tons [2]. - China's steel inventory as of June 12 was 13.5 million tons, down 0.7% WoW and 23.3% YoY, indicating a tightening supply [3]. - Apparent steel consumption in China for the same week was 8.7 million tons, reflecting a decline of 1.6% WoW and 2.3% YoY [4]. Production Summary - Total steel production from the beginning of the year until now stands at 204.2 million tons, which is a decrease of 1.1% YoY [2]. - Specific production figures for rebar, hot-rolled coil (HRC), and cold-rolled coil (CRC) are 51 million tons, 76.5 million tons, and 20.7 million tons respectively, with varying YoY changes [2]. Inventory Summary - The inventory breakdown shows that steel mills hold 4.3 million tons and traders hold 9.3 million tons, with significant YoY reductions in both categories [3]. - The total inventory for rebar, HRC, and CRC is 5.6 million tons, 3.5 million tons, and 1.4 million tons respectively, with notable declines in rebar and CRC inventories YoY [3]. Consumption Summary - Year-to-date apparent consumption of steel in China is 201.6 million tons, which is a slight decrease of 0.3% YoY [4]. - The apparent consumption figures for rebar, HRC, and CRC year-to-date are 49.3 million tons, 76.2 million tons, and 20.8 million tons, showing mixed YoY performance [4].

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the **China Materials** industry, specifically tracking high-frequency demand trends in the steel sector [1] Core Insights and Arguments - **Demand Recovery Expectations**: Market expectations for demand recovery in China remain cautious, with a revised ranking of materials demand: Steel > Cement > Battery > Aluminum > Gold > Copper > Lithium > Coal [1] - **Steel Production Data**: - Total steel production in China for the week of March 28 to April 3 was **8.7 million tons (mt)**, reflecting a **0.3% week-over-week (WoW)** increase and a **1.9% year-over-year (YoY)** increase. Year-to-date production stands at **116.8 mt**, down **1.2% YoY** [2] - Breakdown of production: Rebar at **2.3 mt**, Hot-Rolled Coil (HRC) at **3.2 mt**, and Cold-Rolled Coil (CRC) at **0.9 mt** [2] - **Steel Inventory Levels**: - As of April 3, total steel inventory in China was **16.9 mt**, down **2.7% WoW** and **24.6% YoY**. Inventory levels for steel mills and traders were **4.7 mt** and **12.2 mt**, respectively [3] - Specific inventory for Rebar, HRC, and CRC was **8.2 mt**, **3.9 mt**, and **1.5 mt**, showing declines of **30.9%**, **9.4%**, and **23.4% YoY** respectively [3] - **Apparent Consumption Trends**: - Apparent steel consumption for the week was **9.2 mt**, a **0.1% WoW** increase but a **4.0% YoY** decrease. Year-to-date apparent consumption is **111 mt**, down **6.6% YoY** [4] - Breakdown of apparent consumption: Rebar at **2.5 mt**, HRC at **3.3 mt**, and CRC at **0.9 mt**, with respective YoY changes of **-11%**, **-4.1%**, and **-1.2%** [4] Additional Important Information - The report emphasizes the importance of monitoring these metrics closely as they provide insights into the overall health of the steel market in China, which is critical for understanding broader economic trends [1][2][3][4]