China’s finished steel inventories have reached their lowest point in two years, driven by reduced production and strong export performance. According to the China Iron and Steel Association (CISA), inventories fell to 6.59 million tons by the end of 2024, marking a 9.6% year-on-year decrease and a 12.4% decline compared to 2022 levels.

Despite these low inventory levels, steel prices have remained stagnant due to concerns over potential US tariffs on Chinese steel, which could dampen the seasonal demand recovery typically seen in spring as production ramps up. Seasonal winter demand weaknesses have further contributed to declining steel output, with blast furnace utilization rates dropping to 85% in early January, down from 86% in December.

While steel exports in the first quarter of 2025 are expected to dip compared to the fourth quarter of 2024, they are projected to remain historically strong, helping to ease domestic supply pressures. With limited growth in domestic demand anticipated, exports will continue to play a crucial role in supporting China’s steel market through 2025.