China’s steel markets face a challenging start to the year as supply-demand tensions grow. Although over two dozen construction steel producers reduced output last month, many facilities intend to resume production in January. This recovery arrives just as winter weather dampens construction activity, leading to a projected surplus.

Downward trends in the fuel market further weaken price floors. Coke remains soft as lower coal costs reduce production expenses, leading steel mills to push for additional price reductions. Iron ore and scrap metal show sluggish trading, with buyers purchasing only what is immediately necessary.

Given the combination of rising supply, fading seasonal demand, and crumbling raw material support, steel prices will likely fluctuate with a downward bias in the near term.