Overview: In the first quarter of 2025, the domestic section steel market continued the volatile pattern of the previous quarter, with the contradiction between supply and demand always being the core driving force for price fluctuations. Although the concentrated start of infrastructure projects at the beginning of the year and environmental protection production restrictions in some regions injected temporary vitality into the market, pushing up the price of section steel slightly, the sluggish release of terminal demand and the persistently high social inventory pressure caused the price to fall again after late February. The market as a whole presents typical characteristics of "weak reality and weak expectations", reflecting the industry's cautious attitude towards short-term economic recovery. Entering the second quarter, with the arrival of the traditional peak construction season, the demand side is expected to see marginal improvement. However, the pressure on the supply side and the uncertainty at the policy level will still restrict the upward space of prices. On the one hand, steel mills relieve supply pressure through proactive maintenance and adjustment of production rhythms. On the other hand, the support of policies for infrastructure and real estate projects to ensure the completion of housing projects, as well as changes in the trade environment of the international market, will become key variables influencing the market trend. Overall, the price of section steel in the second quarter is likely to show a narrow range of fluctuations of "stable with a slight strengthening". Industry participants need to seek structural opportunities in the dynamic balance of supply and demand.

The fluctuation trajectory of steel section prices in the first quarter fully reflects the game between market expectations and actual demand. At the beginning of the year, the favorable policy signals released by important meetings and the news of intensified environmental protection production restrictions in the Beijing-Tianjin-Hebei region stimulated market expectations of supply contraction. Some steel mills took the opportunity to raise their quotations, pushing prices up briefly. However, the actual production restrictions were far lower than expected. Coupled with the slow resumption of work at downstream projects, prices gradually dropped after the beginning of March. This mismatch of "strong expectations and weak reality" reflects the industry's doubts about the effectiveness of policy implementation and the pace of demand recovery.

From the perspective of price operation logic, as an important material in the infrastructure and real estate sectors, the trend of section steel is highly correlated with the macroeconomic cycle. The core reason for the weak demand in the first quarter lies in the low rate of infrastructure funds in place and the fact that the real estate industry has not yet emerged from the adjustment period. Although there are expectations of production cuts on the supply side, the actual capacity release remains relatively stable. Furthermore, the low inventory strategy of traders further weakens the market's reservoir function, making price fluctuations more directly reflect the contradiction between supply and demand.

Inventory management is an important barometer of the section steel market. At the end of the first quarter, although the in-plant inventories of steel section producers across the country decreased compared with the previous quarter, they still remained at a high level year-on-year, indicating the passive inventory accumulation pressure faced by steel mills under the background of insufficient demand. Meanwhile, although the total social inventory decreased year-on-year, traders generally adopted the strategy of "low inventory and fast turnover", resulting in a decline in the efficiency of market resource circulation. This change in inventory structure has exacerbated the mismatch between supply and demand between steel mills and end users, making the price transmission mechanism more complicated.

Behind the inventory pressure lies the slow pace of downstream purchasing and the lack of industry confidence. The tight capital chain in the real estate industry and the temporary stagnation of infrastructure projects have led to the fact that end users' purchases of section steel are mainly based on rigid demands, lacking the motivation for long-term stockpiling. In addition, although the increase in the proportion of direct shipments from steel mills has alleviated inventory pressure to a certain extent, it has also compressed the profit margins in the trade process, leading to a decline in market activity.

The total export volume of section steel in the first quarter increased slightly year-on-year, but the significant decline in the average export price exposed the weakness of international market demand and the predicament of intensified competition. Southeast Asia and the Middle East remain major export destinations, and the continuous release of infrastructure demand in these regions provides an incremental market for domestic section steel enterprises. However, the EU market has seen a significant contraction in its export share due to the impact of anti-dumping investigations and carbon tariff policies. This regional differentiation indicates that domestic section steel enterprises need to consolidate their traditional markets while accelerating the exploration of emerging markets to diversify risks.

The decline in export prices is, on the one hand, due to the overall drop in international commodity prices, and on the other hand, reflects the "price-for-volume" strategy adopted by domestic enterprises to compete for orders. Although the short-term growth in export volume helps relieve domestic supply pressure, the long-term reliance on a low-price competition model may weaken the industry's profitability and force enterprises to accelerate their transformation towards high value-added products.