China's steel market has shown stronger fundamentals following this year's Lunar Festival, with total inventory for the five major steel products dropping to 15.703 million tons as of January 31, a historical low and 5.217 million tons less than last year. Pre-holiday stockpiling was lower than usual, but inventory rose by 3.17 million tons during the holiday, matching last year's pace.

Weekly consumption reached 7.1 million tons before the holiday, driven by robust demand for hot-rolled coils (HRC). The 500,000-ton cut in steel production has helped ease post-holiday inventory pressures. Overall, the steel market fundamentals following this year's Spring Festival are stronger compared to last year.

The HRC market remained resilient, bolstered by China's domestic demand under new policies and increased resumption rates in the home appliance and automotive sectors, which hit 40% and 20%, respectively, after the Lantern Festival, a 20-30% rise from last year. On the export side, a widened price gap between Chinese and Vietnamese HRC enhanced export competitiveness.

Export orders for February and March are steady, supporting strong HRC demand. Despite high supply and emerging inventory pressures, the HRC market maintains moderately strong fundamentals. Market focus now shifts to demand recovery and macroeconomic policies during China's Two Sessions.