Chinese Steel Prices Remain Low in 2026
Date:2026-06-24
Overall Price Performance: Shift to a Lower Baseline and Narrowed Volatility
Slight year-on-year increase, yet absolute price levels remain low: In the first half of 2026, taking rebar as an example, the national average price was approximately 3,357 yuan/tonne—a marginal rise of just 27 yuan/tonne (0.81%) compared to the first half of 2025. This indicates that while prices saw a slight rebound, they generally hovered at low levels.
Narrowed volatility: The spread between the high and low prices for rebar in the first half of the year was only 192 yuan/tonne. This reflects a market characterized by intense tug-of-war dynamics amidst weak supply and demand, yet lacking a clear directional trend, resulting in reduced price elasticity.
Continued weakness in the near term: As of mid-June, the average price across eight major steel product categories stood at approximately 3,643.5 yuan/tonne, marking slight declines both month-on-month and year-on-year. Prices for the main futures contracts also briefly dipped to around 3,122 yuan/tonne.
🔍 Core Issues: Structural Shifts in Supply and Demand; Unstable Cost Support
1. Demand Side: "Weak Domestic, Strong Overseas" with Intensifying Structural Divergence
Weak domestic demand is the primary drag: Real estate investment remains sluggish (down 16.2% year-on-year from January to May), and growth rates for infrastructure and manufacturing investment have also slowed, leading to persistently weak domestic steel consumption. Demand for construction steel has weakened further as the market enters the traditional off-season.
External demand serves as a crucial buffer: Exports have become key to absorbing domestic supply pressure. Steel exports reached 10.341 million tonnes in May, and the export window reopened following price drops. Additionally, rising costs for short-process steel mills in certain overseas markets (such as the US)—driven by geopolitical factors—have highlighted the cost advantages of China's long-process steel, suggesting that export resilience is likely to be maintained.
2. Supply Side: Inherent Rigidity; No "One-Size-Fits-All" Approach to Production Cuts
Limited incentive for steel mills to cut production: Despite thin industry-wide profit margins (industry profits fell 51.5% year-on-year in the first four months) and the traditional off-season, steel mills have managed to maintain marginal profits through measures such as adjusting price premiums for specific product grades. Consequently, there is little willingness to voluntarily implement large-scale production cuts, meaning supply pressure has not been substantially alleviated. Policy constraints act as slow-moving, long-term variables: policies such as "Dual Carbon" performance assessments and new regulations on capacity replacement during the "15th Five-Year Plan" period will gradually drive a contraction in supply, without triggering a sudden, "one-size-fits-all" drop in output in the short term.
3. Cost Support: Shifting from "Strong Support" to "Weak Balance"
Cost factors are key to preventing a price collapse in 2026, though the strength of this support is shifting:
Once a source of strong support: In the first half of the year, prices for coking coal and coke remained firm—driven by coal mine safety inspections and geopolitical conflicts—providing a solid floor for steel prices.
Recent signs of softening: As of June, with some coal mines resuming production and steel mills pressuring downstream buyers, coke prices entered a downward cycle; meanwhile, iron ore prices fell below critical levels. The logic of firm cost support has reversed, creating a negative feedback loop of "declining costs leading to falling steel prices."
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