This year, the enthusiasm for winter stockpiling of construction steel in Shandong Province, China, has cooled down, and winter inventories will continue to decline.

This year, the enthusiasm for winter stockpiling of construction steel in Shandong Province, China, has cooled down, and winter inventories will continue to decline.

Research Background: Shandong Region, China, since January Construction steel Prices have been fluctuating within a narrow range. Downstream end-user demand in the local market has been steadily weakening, and steel mills are gradually implementing production-cutting plans. Against the backdrop of a relatively low supply chain at steel mills, total market inventories have slightly declined. Recently, with widespread snowfall sweeping across the Shandong region of China, most downstream construction projects have come to a standstill, and traders have reported very few transactions. As a result, market attention has shifted to the topic of “winter stockpiling.” Although some major local steel mills have already indicated that they will not adopt winter stockpiling policies this year, from the perspective of traders’ inventory management, the fact that traders are holding onto stocks during a season with virtually no demand suggests that they have indeed engaged in winter stockpiling activities. So, what changes have occurred this year in the winter stockpiling practices of China’s Shandong construction steel trading companies?

From January 15 to 20, the Shandong Information Team from China conducted a survey of construction steel and steel trading enterprises in the Shandong market, aiming to gain an initial understanding of winter stockpiling conditions for 2026 in Shandong. This survey covered 50 sample enterprises, of which 45 provided valid data. The survey examined changes in the winter stockpiling market for 2025 and 2026 from several perspectives, including expectations for winter stockpiling prices, projected winter stock levels, sources of funding, and post-holiday price forecasts.

Research conclusion:

1. This survey involved 50 companies, of which 45 provided valid responses. Half of the surveyed companies anticipate winter stockpiling, but most indicated they will wait for the final ex-factory prices from steel mills before making a decision.

2. This year, the enthusiasm for winter stockpiling among agents has significantly waned, with the total planned winter stockpile amount reaching only 60% of last year’s level. Among this, local timber accounts for over 90% of the winter stockpile, while the proportion of imported timber has decreased compared to last year.

3. The winter storage price range most widely recognized by the surveyed trading companies is between 3,050 and 3,080 yuan per ton (ex-factory). The surveyed prices are generally slightly lower than current transaction prices.

4. The surveyed enterprises are mainly first-tier agents of steel mills, while second-tier distributors show relatively low participation in winter stockpiling. Nearly 80% of agents are funding their winter stockpiling efforts through self-raised capital, and the proportion of funds provided by pallet financing has decreased compared to last year.

5. Most of the surveyed trading companies indicated that, given some steel mills still plan to further cut production next month, there could be an upward trend after the Spring Festival. However, the pace at which end-users resume operations after the holiday will affect shipments and cash realization, leading to an overall cautious yet optimistic sentiment.

The specific survey findings are as follows:

1. This year, the group of companies engaging in winter stockpiling is relatively concentrated, with nearly 80% of enterprises being first-tier agents for steel mills. In terms of winter stockpile volumes, the surveyed companies anticipate this year’s winter stockpile to reach 243,500 tons, compared to 3.95 million tons during the same period last year—a decrease of 38.35%. Among these stocks, imported materials account for about 8%, a slight reduction from last year’s level.

2. Among the companies participating in this survey, the psychologically acceptable price range for winter stockpiling is between 3,050 and 3,080 yuan per ton; market expectations for prices are slightly lower than current transaction prices. Recently, spot prices have edged down slightly, and trading companies still anticipate further price reductions in the coming period, resulting in relatively few proactive early winter stockpiling activities.

3. According to the survey results, due to the anticipated reduction in winter reserves this year, the funding model for winter stockpiling has undergone a shift. Over 80% of traders explicitly stated that they will adopt a hybrid funding model and use their own free funds this year, with pallet-based financing accounting for approximately 16%.

4. Agents noted that this year’s Spring Festival is later than usual, and Shandong has experienced cooling temperatures and snowfall relatively earlier than in previous years, significantly impacting demand. Construction sites have started their holidays earlier, giving funders more time to recover their investments on one hand, while steel mill agents, in order to meet contracted volumes, have been passively stockpiling resources ahead of schedule on the other hand. However, some steel mills still plan further production cuts next month, meaning the actual amount of winter-stocking resources proactively released onto the market by steel mills may be relatively limited.

5. In addition, this survey also explored market expectations for the Spring Festival. Nearly 90% of the surveyed companies are optimistic about the post-festival market, though most anticipate price increases of no more than 100 yuan per ton. Overall, sentiment is cautiously optimistic. Most respondents indicated that they will resume operations as soon as possible after the festival and will “monetize winter stockpiles as soon as profits appear.” However, they also expressed concern that construction sites may resume work slowly after the festival, making it more difficult to convert inventory into cash.