Posted on 25 Jun 2026
The slide seen in China's steel market since late May is expected to continue this month amid weakening market expectations and the slowdown in destocking, according to the latest monthly report of the China Iron & Steel Association (CISA).
On the macroeconomic front, the Middle East conflict and the resulting energy supply disruptions are exerting pressure on global economic growth. The latest Economic Outlook report of the Organization for Economic Co-operation and Development released on June 3 showed that global economic growth is projected to slow from 3.4% in 2025 to 2.8% in 2026, as Mysteel Global reported.
In China's domestic market, the country has entered the usual off-season for steel consumption in summer, the association noted. Demand from steel end-users has seen a notable contraction as frequent rains in southern China and high temperatures in northern China have disrupted outdoor construction activities, it said.
Meanwhile, the pace of destocking of steel inventories held by Chinese traders has slowed significantly, putting pressure on domestic finished steel prices.
As of June 10, stocks of the five major steel items comprising rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plate at traders' warehouses across the 21 Chinese cities under CISA's regular tracking reached 9.38 million tonnes, down by a tiny 0.1% from the end of May.
During June 1-10, daily crude steel production among CISA's member steel mills averaged 2.08 million tonnes/day, rising by 3.8% from late May, according to the report.
Consequently, inventories of the five steel items held by CISA's member mills increased with their higher output to reach 16.87 million tonnes as of June 10, jumping by 6.6% from ten days earlier.
However, the tight supply of coking coal since late May has triggered sharp price rallies, which in turn prompted coke producers to roll out several rounds of price hikes, as reported.
Under the two-way squeeze of rising costs and weakening demand, the profit margins of Chinese steel mills have narrowed, CISA warned. The association suggested that domestic steel mills should arrange maintenance or control output based on actual orders, so as to avoid the vicious cycle of off-season inventory accumulation and subsequent price cuts to destock.
Externally, Chinese steel exports are under growing pressure from escalating trade barriers abroad, CISA pointed out in the report.
The European Union will slash its duty-free steel import quota by 43% to 18.3 million tonnes annually starting July 1, while simultaneously raising out-of-quota tariffs from 25% to 50%. Compounding this, the EU's Carbon Border Adjustment Mechanism (CBAM) entered its mandatory collection phase on January 1 2026, imposing additional carbon-related costs on Chinese steel products. In parallel, the United Kingdom is also set to tighten its tariff quota regime from July 1 2026, the association noted.
Over the medium- to long-term, CISA believed that urban renewal under China's "15th Five-Year Plan" will generate a certain increment in steel demand, partially offsetting the decline in steel consumption from the real estate sector and thereby moderating the downward slide in total demand.
On the supply front, the revised version of steel capacity 'swap' guidelines issued by China's Ministry of Industry and Information Technology in mid-May imposes stricter replacement ratios. These will curb capacity expansions, rebalance supply and demand, and boost industry consolidation, according to CISA's report.
Source:Mysteel Global
