Posted on 21 May 2026
China's steel market is expected to stay under pressure from the dual impact of high raw material costs and the upcoming off-season for steel consumption in summer, despite domestic steel prices continuing to rise since the second half of April, according to the latest monthly report of the China Iron & Steel Association.
At present, the global economy stands at an uncertain juncture dominated by geopolitical conflict, the association said. Global energy prices have surged due to the outbreak of conflict in the Middle East in late February, and the steady rise in prices of major steelmaking raw materials and energy has been squeezing the steel industry's profit margins.
The uncertainty stemming from the tense situation in the Middle East remains the greatest risk variable affecting raw material and energy prices. Should the conflict continue to escalate and crude oil prices persist at elevated levels or rise further, both ocean freight rates and energy costs will be driven upward, thereby putting additional pressure on the profitability of steel mills, CISA warned in the release.
Besides, China's steel market is expected to enter the summer off-season of low consumption soon, and steel demand from end-users may slow down with the upcoming rainy season in southern China that will disrupt construction activity on building sites. Meanwhile, high temperatures in northern China may lead to a slowdown in construction progress and the pace of steel procurement among end-users.
Crude steel production among CISA's member steel mills increased in early May, with their daily output averaging 2.11 million tonnes/day over May 1-10, growing by 3.6% from late April, as Mysteel Global reported.
With the higher output, inventories of the five major steel products comprising rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plate held by CISA's member mills totaled 16.88 million tonnes as of May 10, jumping by 9.4% from ten days earlier and up by 5.1% on year.
As of May 10, stocks of the five major steel items at traders' warehouses across the 21 Chinese cities under CISA's regular tracking totaled 10 million tonnes, still higher by 17.6% on year even though the quantity had slipped by 2.2% compared with the end of April.
CISA warned that the steel supply-demand balance could deteriorate once again if steel demand softens seasonally and mills fail to adjust their production accordingly. The association pointed out that domestic steelmakers should closely monitor the changes in demand and the latest development in Middle East while continuing to curb their steel production and reduce inventories.
However, China's continued loose monetary policy, combined with accelerated fiscal spending, is expected to provide structural support for the country's steel demand in the second half of this year.
According to relevant documents released in late April, China aims to reduce carbon emission intensity by more than 65% by 2030 compared to 2005 levels, with non-fossil fuel consumption accounting for around 25%. The documents also call for comprehensively improving energy efficiency in key industries, including steel, CISA noted.
These policy deployments have significantly reinforced market expectations that production capacity from integrated steelmakers will remain constrained. This is expected to accelerate the phase-out of outdated capacity and help improve the supply-demand balance in the steel market, according to CISA's release.
Source:Mysteel Global
