Posted on 28 Jul 2025
China's steel prices are primarily driven by supply-side dynamics amid weakening demand for finished steel and sufficient supply of steelmaking raw materials, according to the latest monthly report of the China Iron & Steel Association (CISA).
The association pointed out that domestic steel demand has weakened further since the start of this month with the extreme heat and heavy rains reaching seasonal peaks across China.
Inventories of the five major steel products comprising rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plate in the 21 Chinese cities under CISA's regular tracking had reached the turning point of 7.75 million tonnes as of July 10, rising by 0.8% from the end of June and ending the continuous fall since mid-March.
Stocks of the five major steel items held by CISA's member mills declined at a slower pace in early July to reach 15.07 million tonnes, down 2.4% from the end of June, according to CISA's report.
On the supply side, China's steel output also decreased in early July, with daily crude steel production among CISA's member mills averaging 2.1 million tonnes/day, lower by 1.5% from the average for late June, the report showed.
The association warned that global trade during the current half of this year is facing growing headwinds. The uncertainty of U.S. trade policy and persistent geopolitical tensions may put more pressure on the recovery of the global economy, it noted.
For example, in June the global manufacturing Purchasing Managers' Index (PMI) struggled in the contraction zone for a fourth consecutive month, evidence of persistently weak economic momentum worldwide, CISA noted.
Against the backdrop of growing global uncertainties and insufficient domestic demand, China's central government may roll out incremental stimulus policies during this quarter to secure its annual GDP growth objectives, the association suggested, adding that since the second quarter of this year, the central bank has intensified monetary policy adjustments to stabilize market liquidity and confidence.
Earlier this month, the country's Central Financial and Economic Affairs Commission called for an elimination of excessive competition and a phasing out of obsolete industrial capacity, as Mysteel Global has reported. This has reinforced market expectations that crude steel production controls will be imposed on steelmakers, according to CISA's report.
Given the widening gap between supply and demand, the association urges Chinese steel producers to rationalize production while closely tracking the progress of crude steel output control policies.
For this year, China's steel exports will stay under pressure from the flurry of anti-dumping investigations targeting Chinese steel exports. Meanwhile, the tariff policies initiated by the Trump administration have also pressured global steel exports, the report pointed out.
Chinese steel producers are encouraged to closely monitor changes in global steel demand and the impact of trade protectionism, adjusting their export strategies in time to reduce risks, according to the report.
Source:Mysteel Global
