Steel prices are expected to follow an "N" shaped trend throughout the year.
Mainly long-term low-level buying
In the first half of 2025, China Steel market The overall pattern of supply and demand imbalance continued, the price center continued to shift downward, and the market performance was relatively sluggish. From the price trend, Rebar price The cumulative decline was about 10%, and the amplitude was 17.99%, significantly weaker than Metallurgical coke Varieties, reflecting the reality of weak downstream demand and insufficient cost support.
From June to now, the market has seen a rebound after a sharp drop, mainly due to the demand for valuation repair and the temporary supply contraction caused by the shutdown of some coal mines due to environmental inspections. However, this rebound is more of a technical repair rather than a substantial improvement in fundamentals.
Overall, the pattern of loose supply and demand remains unchanged. Although steel inventories are at a low level, the demand side lacks sustained support, coupled with the marginal weakening of the manufacturing industry and the slowdown in export growth expectations, limiting the upside potential of prices.
Looking ahead to the second half of the year, although there is a combination of "moderately loose monetary policy + proactive fiscal policy" on the policy front, it still takes time for the effect to appear, the demand for real financing is weak, and it is difficult to reverse the supply and demand contradiction in the short term. If the crude steel production control policy is implemented, it may become a key variable affecting the market trend.
Supply side: Policy-driven contraction, increasing global differentiation
From January to May 2025, the cumulative national crude steel output reached 431,710,000 tons, a year-on-year decrease of 4,414,000 tons, a decrease of 1.01%. This data reflects two important characteristics: First, although the reduction policy in the first half of the year has not yet been officially issued, market expectations have already had a substantial impact on production behavior; second, the National Development and Reform Commission has repeatedly mentioned production control, and at the end of June, it clearly proposed the policy orientation of rectifying "involutionary" competition, and some regions have already started environmental protection and production restrictions.
From the production data, the blast furnace operating rate in the first five months was generally higher than the same period last year, but it has begun to decline since May. Combined with policy guidance and market expectations, the industry generally expects that crude steel production in the second half of the year will decrease by about 1.5% year-on-year, and the total annual output is expected to be controlled within 1 billion tons.
From a global perspective, crude steel production shows a clear structural differentiation. While China's production has slightly decreased, India's performance has been particularly eye-catching, with crude steel production increasing by 8.42% year-on-year from January to May. Germany and Russia's production has fallen significantly, by 10.34% and 6.09% respectively. This differentiated pattern is expected to continue in the second half of the year. European and American countries may continue to reduce production due to the slowdown in economic growth and the pressure of green transformation, while emerging markets such as India may continue to increase production, but it is difficult to offset the overall downward trend.
Demand side: Weak real estate data, slowdown in infrastructure and export growth
The demand side has become the main weakness of the steel market in the first half of the year. From January to May, the national apparent consumption of crude steel was 378,424,500 tons, a year-on-year decrease of 15,859,100 tons, a decrease of 4.02%. Real estate investment data is weak, with cumulative development investment down 10.7% from January to May, and the year-on-year decline in new housing starts is 22.8%, which suppresses Construction steel Demand.
Although infrastructure investment has maintained growth, the growth rate has fallen compared to the same period last year, and the effect of special bonds has not yet been fully realized. In terms of exports, the cumulative steel exports from January to May reached 37.89 million tons, a year-on-year increase of 8.2%, but affected by the US imposition of "reciprocal tariffs", anti-dumping investigations by South Korea and Vietnam, etc., the growth rate may slow down in the second half of the year.
Looking ahead to the second half of the year, the demand side is expected to achieve a "weak recovery". Under the loose policy (such as the first-home loan interest rate falling to 3.05% and the provident fund interest rate being lowered), the real estate market may continue to recover weakly, but high inventories and lack of confidence restrict the strength of the rebound. Infrastructure is expected to accelerate with the support of special bonds and special government bonds, but the boost to steel demand remains moderate. Manufacturing investment is stable but declining, and the export growth rate of downstream products such as automobiles and electromechanical products may slow down marginally. Overall, the apparent demand for crude steel in the second half of the year is expected to be 440 million to 450 million tons, slightly better than the first half of the year, but still lower than the same period last year.
Future outlook: Continuation of the weak supply and demand situation
The steel market will continue the complex situation of "dual decline in supply and demand". On the supply side, constrained by the crude steel reduction policy, the year-on-year contraction in production has become a certainty; although the demand side may achieve a "weak recovery", the weak recovery of real estate and the slowdown in export growth are difficult to fundamentally reverse, and infrastructure investment alone cannot support the market.
In this context, the full year Steel price Is likely to show an "N"-shaped trend. In the third quarter, there will be a phased rebound due to policy expectations (such as the implementation of detailed rules for crude steel reduction), but in the fourth quarter, it will face the double test of the off-season demand and inventory pressure. Overall, the probability of the annual price center shifting downward from 2024 is relatively high. (Author's unit: New Era Futures)
