Posted on 03 Jul 2025
The slide in Chinese steel prices that has continued for two months could end this month and see prices rebound mildly, Mysteel's chief analyst Wang Jianhua suggests in his latest monthly outlook. Wang cites the potential for a rise in the production costs being borne by steelmakers increases they will pass to customers together with the relatively positive market prospects.
The country's steel prices headed south in June amid bearish market sentiment, but the pace of the decline has slowed, with Mysteel assessing the national composite spot price averaging Yuan 3,346/tonne ($467/t) including the 13% VAT over the month, lower by just 0.5% from the previous month.
In fact, by the end of June, domestic prices of iron ore and finished steel had shown signs of increasing, in parallel with the recovery in coking coal prices, Wang noted. Entering July, the further strengthening of coal prices caused by mining disruptions will provide more upward momentum for other ferrous commodities, he predicts.
In late June, China's National Mine Safety Administration launched coal mine safety inspections across the country, prompting many mining companies to reduce or suspend production, Mysteel Global learned.
During the week of June 18-24, the combined production of raw and washed coal among the 523 mines nationwide under Mysteel's tracking averaged 2.6 million tonnes/day, hitting the lowest level since mid-February this year. By June 24, the total stocks of raw and washed coal at these mines that had been steadily mounting for two months dropped by 4.5% on week to 11.4 million tonnes, the survey results showed.
With safety inspections ongoing at mines nationwide throughout July, domestic coking coal supply is expected to shrink further, lending some support to coal prices which in turn will impact the production costs of steelmakers, Wang predicts.
On the other hand, July may see more proactive macroeconomic developments from Beijing, which could also give a boost to the domestic ferrous market, according to Wang.
"China's gross domestic product for the first half of this year could potentially exceed 5%, reflecting stronger-than-expected economic performance," Wang noted. Besides, "the upcoming Political Bureau meeting of the CPC Central Committee scheduled for late July is expected to see more incentive policies unveiled," he added.
On fundamentals, low steel inventories across the country will also underpin prices, Wang observed. By the end of June, the total stocks of the five major carbon steel products held by steelmakers and trading houses across the 35 cities under Mysteel's monitoring had dropped by 1.9% on month to 13.4 million tonnes, lower by a significant 24.5% compared with the same period last year.
However, "excessive optimism about the market this month would be misplaced, as the persistently high domestic supply will continue to exert downward pressure on prices," Wang warned.
Production among Chinese blast furnace (BF) steelmakers remains robust as most mills have not yet been affected by losses, Mysteel's survey showed.
During June, the total hot metal output among the 247 BF steel producers under Mysteel's tracking averaged 2.42 million t/d, higher by 1.4% on year, while by the end of the month, around 60% of these sampled mills said they could enjoy positive margins on their steel sales.
In such a scenario, any rebound in China's steel prices in July is expected to be limited, Wang predicts.
Source:Mysteel Global
