A weekly decline in apparent steel demand has raised doubts about the durability of the demand recovery and weighed on market sentiment, according to a Baocheng Futures research report. Apparent demand across five major steel products fell 4.52% from the previous week, while output declined just 0.31%.

Rebar recorded a sharper contraction than hot-rolled coil, with apparent demand falling 9.56% and 4.00%, respectively. The declines point to renewed weakness across both products, although their differing rates of decline suggest the demand picture is uneven.

On the supply side, overall steel production remained at a low level, and total inventories across the five major products fell 2.17% week on week. Continued inventory drawdowns indicate that stocks were still being absorbed, but they do not, by themselves, establish that demand was strengthening. Inventories can decline alongside weakening consumption when supply remains constrained.

The central concern is the gap between the modest reduction in output and the larger drop in apparent demand. If demand continues to weaken without a corresponding supply adjustment, inventory drawdowns could slow, potentially adding pressure to market sentiment and pricing expectations. The reported figures do not establish that steel prices have already fallen.

Subsequent weekly readings will be important for assessing whether the latest contraction is temporary. A sustained improvement in apparent demand for rebar and hot-rolled coil, alongside continued inventory reductions, would provide stronger support for a recovery. Further demand declines would leave the market more dependent on restrained production to limit inventory pressure.