Structural recovery in the real estate market, slower destocking of total steel inventories, and a moderate rebound in rebar stocks.

Following the traditional peak sales period of March and April, the property market did not see the usual seasonal cooling in May. Sustained favorable policies have bolstered market recovery momentum, with first-tier cities delivering standout performance. Some residential projects in Shenzhen even sold out entirely on their launch day.

Total inventories of the five major steel products continued to edge down this period. Both social and mill inventories kept declining, yet the decreases narrowed further. By product category: rebar inventories rose moderately; wire rods, hot rolled coils and medium & heavy plates posted continued inventory declines; cold rolled coils reversed the upward trend and moved lower. Total domestic steel inventories are expected to see a slight drop next week.

Steel Social Inventories

For the week ending June 4, 2026, data from Steelhome showed social inventories of rebar stood at 4.7664 million tons, down 26,200 tons week on week, compared with a week-on-week drop of 29,400 tons in the prior week. This marked the 11th consecutive weekly decline, though the reduction pace has slowed noticeably recently.

On the supply side, the average daily crude steel output of key domestic steel enterprises fell week on week in mid-May, remaining lower than the level in the same period of last year, which eased supply pressure slightly.

Currently, the solar term of Grain Buds has arrived, and Grain in Ear, the ninth solar term and the third solar term of summer, will come on June 5. Temperatures rise markedly across the country during this period, accompanied by abundant rainfall and high humidity, with hot weather becoming more frequent in both northern and southern regions.

The steel industry is now transitioning from the seasonal peak demand season to the off-season. After falling for four straight periods, the blast furnace operating rate of steel mills rebounded slightly. Overall, domestic steel inventories are still in the destocking cycle, albeit at a slower pace, and posted another decline this period.

In terms of construction steel, current social inventories of rebar are 735,400 tons higher than the same period last year, versus a surplus of 603,200 tons in the previous period. A year ago, rebar social inventories dropped 158,400 tons week on week, while the current decline is only 26,200 tons, pointing to a weak marginal improvement. To sum up, rebar social inventories are higher year on year, and the destocking pace is far slower than last year, reflecting unsatisfactory production and demand regulation for rebar.

Steel Mill Inventories

Steel mill rebar inventories kept falling in April. They started to rise in late May and extended the gains for the third consecutive week this week. As of June 3, tracked sample steel mills held 3.4108 million tons of rebar in stock, up 40,100 tons week on week, compared with a week-on-week increase of 60,700 tons in the prior period, with the growth rate moderating.

Mill rebar inventories are currently 102,100 tons above the year-ago level, versus a year-on-year surplus of 94,600 tons previously. In the same period last year, mill rebar inventories increased 32,600 tons week on week, against the current rise of 40,100 tons, showing weak marginal changes. It indicates that steel mills have achieved limited results in production control, as mill rebar inventories are higher than last year and accumulating at a slightly faster pace.

The property market showed clear signs of structural recovery in May. Two residential projects in Shenzhen were fully sold out on the opening day on May 23. A project developed by China State Construction in Beijing recorded total online signed sales of 769 million yuan and retained its title as the regional bestseller in May. In Shanghai, the transaction volume of second-hand homes reached 28,023 units in May, hitting a five-year high for the same period.

Instead of the usual seasonal slowdown after the March-April peak season, the property market has gained stronger recovery momentum driven by ongoing favorable policies.

Regional Market

According to Steelhome data, construction steel inventories in East China maintained a destocking trend in May 2026 with mild fluctuations recently. The figure reversed to an increase this period. As of June 4, construction steel inventories in East China rose to 832,800 tons from 774,700 tons in the prior week, up 58,100 tons, after four consecutive weeks of declines. The operating rate of construction steel production lines at local mills remained stable, while downstream seasonal demand weakened.

Domestic steel prices trended lower this week. For the week ending June 4, the long product price index tracked by Steelhome fell 0.81% week on week, and the flat product price index dropped 0.57% week on week, with both declines widening.

Inventories of Five Major Steel Products

In the week ending June 4, 2026, total social inventories of the five major steel products nationwide stood at 12.7769 million tons, down 46,100 tons or 0.36% week on week. The prior week saw a reduction of 110,300 tons or 0.85%, showing a continued slowdown in destocking.

Combined social and mill inventories of the five major steel products totaled 20.5025 million tons, a net decrease of 63,300 tons week on week, with the decline narrowing sharply from a net drop of 180,700 tons in the previous period. By comparison, total inventories fell 48,900 tons in the same period last year.

Supply Situation

Data from the China Iron and Steel Association showed that in mid-May 2026, key steel enterprises reported average daily crude steel output of 2.096 million tons and pig iron output of 1.879 million tons, down 0.7% and 0.9% week on week respectively. Based on estimation, the national average daily crude steel output reached 2.81 million tons and daily pig iron output hit 2.36 million tons for the ten-day period.

As of May 21, the national blast furnace operating rate monitored by Steelhome was 89.35%, down 0.24 percentage points week on week, following a 0.06 percentage point decline in the prior week, marking four consecutive periods of decreases.

Domestic steel inventories are still in the destocking cycle, yet the pace keeps slowing. Though the current total inventory decline of 63,300 tons week on week is slightly better than the 48,900 tons recorded a year ago, the overall inventory level remains higher than last year.

China’s economic performance in April presented a divergent pattern: strong external demand but weak domestic demand, rising prices but sluggish real economy. Exports and the Producer Price Index (PPI) posted higher-than-expected growth, while industrial output, consumption and investment all weakened, with insufficient domestic demand recovery becoming the major challenge.

Fixed asset investment fell 1.6% year on year in the first four months, compared with a 1.7% increase in the first quarter. Social inventories of the five major steel products decreased 46,100 tons this period, less than the 77,600 tons seen in the same period last year, reflecting weak marginal changes, and social inventories are still notably higher year on year.

The growth of fixed asset investment has slowed down, and the driving effect of traditional infrastructure has faded. It is urgent to foster new growth drivers for investment. The “Six Major Infrastructure Networks” integrate shortcomings improvement in traditional infrastructure and expansion of new-type infrastructure. Its investment volume is expected to exceed 7 trillion yuan in 2026. The estimated total investment for the initiative will reach 20 trillion to 27.5 trillion yuan during the 15th Five-Year Plan period. If including comprehensive transportation, education, medical care and other major infrastructure projects, the full-scale total investment is projected to surpass 35 trillion yuan by third-party estimates. This initiative can directly expand investment, stabilize economic growth and fully tap the potential of domestic demand.

Total steel inventories are expected to continue falling next week. Market participants shall keep a close eye on changes in the operating rate of blast furnaces and electric arc furnaces at steel mills, as well as the release of end-user demand.