Stocks held by mills and those in the social market both decreased, reversing the earlier accumulation trend and indicating that inventories moved back into destocking after the National Day holiday disrupted construction activity and logistics. The decline followed a period in which end-user demand had weakened sharply during the October 1-7 holiday, when fewer transactions and largely steady production caused broader finished-steel stocks to rise.
The post-holiday improvement was visible in construction-steel demand, with apparent consumption increasing notably from the previous period as construction activity and trading gradually returned toward normal levels. The recovery was not uniform across China, however. Colder weather in northern regions slowed work at construction sites and reduced needs-driven purchasing, while more favorable conditions in the south allowed projects to maintain a more normal pace. The opposing regional trends left overall demand broadly comparable with the preceding period rather than producing a decisive nationwide acceleration.
Supply also remained mixed. Most long-process mills were operating below full capacity, and only a small number resumed rolling lines as planned. At the same time, two rounds of coke-price reductions improved the economics of hot-metal production and eased some raw-material pressure on electric-arc-furnace mills. Steel profitability remained generally above break-even, allowing some EAF producers to extend operating hours or restart furnaces. Short-process mills with workable margins and manageable scrap supplies were therefore able to preserve off-peak or valley-power production levels, apart from routine maintenance at several facilities.
The inventory decline is consequently weaker evidence of a broad demand revival than the headline reduction alone might suggest. The later construction-steel destocking therefore reflects a post-holiday change in flows, but the pace of improvement remains constrained by production that has not fallen sharply and by demand that is diverging by region.
Near-term conditions are best described as steady but fragile. Lower inventories provide some evidence that material is being absorbed, while improved mill economics create a counterforce by making additional output more viable. Unless demand strengthens across both northern and southern markets at the same time, the current balance can persist without developing into a clear tightening of supply. The next meaningful test is whether construction-site activity and trading remain strong enough to sustain destocking after the initial post-holiday normalization, while mills decide whether improved margins justify maintaining or increasing operating rates.