Shanghai steel market expected to rebound in the near term
Cost support strengthens
Looking ahead to November, demand may weaken marginally due to seasonal factors, though the extent is expected to remain limited. The five major steel product categories are likely to continue their inventory-depletion trend, while strong raw material prices will bolster cost support. Steel prices There is still hope for a rebound.
October, Reinforcing steel bars And Hot Rolling Coil plate prices The market showed a pattern of first declining and then rebounding. In the first half of the month, trading was primarily driven by concerns over high inventory levels and weak demand. However, in the latter half, as the macroeconomic environment improved and inventory levels began to decline, prices staged a noticeable recovery. Looking ahead to November, demand may weaken slightly due to seasonal factors, but the decline is expected to remain limited. Meanwhile, the five major steel products are likely to continue their trend of inventory reduction, while robust raw material prices will strengthen cost support, potentially paving the way for steel prices to rebound once again.
Production is expected to decline slightly.
On October 24, the Ministry of Industry and Information Technology released the revised "Implementation Measures for Capacity Replacement in the Iron and Steel Industry (Draft for Public Comments)," further tightening the requirements for capacity replacement ratios. As a result, the iron and steel industry will continue to face relatively stringent constraints on its production capacity in the medium to long term.
In October, affected by declining profits at steel companies and weather conditions in the Tangshan region, Iron-melting output The month-on-month figures continue to decline. According to data from MySteel, the average daily molten iron output dropped from 2.4181 million tons at the beginning of the month to 2.3636 million tons by the end of the month. Starting November 3, Tangshan City has once again activated its Level II emergency response for severe pollution. Considering demand expectations and corporate profit conditions, the average daily output in November is likely to remain under pressure. Pig iron Production may continue to decline on a month-over-month basis. From the perspective of finished steel products, hot-rolled coil production remains at its highest level for the same period over the past five years, making further reductions necessary. Meanwhile, rebar output remains relatively low, so there’s not much contradiction when projecting supply and demand balances. We expect that the decline in finished steel production will primarily affect plate products.
Export volumes remain high.
From January to September 2025, China’s cumulative steel exports reached 98.6964 million tons, representing a year-on-year increase of 17.14%. In September alone, exports totaled 11.9593 million tons. Against the backdrop of sluggish domestic demand with no significant growth, steelmakers have shown increased willingness to export. By late October, some steel mills had slightly lowered their export pricing, leading to a noticeable rebound in export volumes. It is expected that direct steel exports will remain at a relatively high level during November and December as well.
In terms of indirect exports, the U.S. cut interest rates by 25 basis points consecutively in September and October, with markets anticipating one more rate cut later this year as expectations for a recovery in overseas manufacturing continue to rise. In September, the global manufacturing PMI stood at 50.8%, remaining above the threshold that separates expansion from contraction. This suggests that, as the Federal Reserve continues its easing policy, global demand for goods trade is likely to gradually improve.
Domestic demand remains generally stable.
Real estate continues to face subdued demand for steel, though infrastructure-related steel consumption may see a modest rebound toward the year-end. Meanwhile, with manufacturing demand remaining relatively robust, overall domestic steel demand is expected to remain stable throughout the year.
From January to September 2025, broad-based infrastructure investment growth slowed to 3.3% year-on-year. Notably, the electricity, heat, gas, and water sectors expanded by 15.3%, while transportation and warehousing grew by 1.6%. In contrast, investments in water conservancy, environmental protection, and public facilities management declined by 2.4%. This slowdown was partly attributed to the front-loaded issuance of government bonds earlier in the quarter, which temporarily curbed infrastructure growth. However, as infrastructure remains a critical tool for counter-cyclical economic adjustments, policymakers are likely to introduce supportive measures in the fourth quarter, potentially paving the way for a gradual recovery in infrastructure spending.
Meanwhile, manufacturing investment continued its resilient momentum, rising 4% year-on-year from January to September 2025. The construction machinery sector maintained its upward trajectory, with total excavator sales reaching 174,039 units—a 18.1% increase compared to the same period last year. Similarly, loader sales climbed to 93,739 units, marking a 14.6% rise over the prior year.
The automotive industry also sustained strong growth, with production and sales volumes totaling 24.333 million vehicles and 24.363 million vehicles, respectively, representing year-on-year increases of 13.3% and 12.9%. Looking ahead, the upcoming implementation of the policy halving the purchase tax on new energy vehicles in 2026, combined with the traditionally robust auto sales season in the fourth quarter, is poised to drive sustained high demand for steel in the automotive sector during November and December 2025.
Inventory pressure remains to be eased.
July and August traditionally mark the off-season for demand, but steel prices rebounded, boosted by the "anti-inward competition" policy. As a result, steel production has remained relatively high, with rebar and hot-rolled coil inventories climbing to record levels. However, despite the peak season typically arriving in September and October, demand hasn’t picked up as expected, leading to slower inventory destocking and mounting pressure. In the final two weeks of October, rebar inventories began to decline again. If this trend continues, November may see further improvements in inventory levels. Rebar Inventory The pressure will gradually ease.
The raw material side is well-supported.
In recent years, raw material prices in November have generally remained strong, primarily driven by expectations of downstream inventory restocking. Currently, upstream coal mines and coking coal inventories are at low levels, and domestic supply is recovering slowly, suggesting that prices are likely to stay firm in the near term. Coke Following coking coal fluctuations, spot prices have now entered their third round of price hikes. Iron ore On the one hand, although inventories have recently accumulated somewhat, the increase has been modest, and total stock levels remain lower than last year同期. Moreover, the high basis premium continues to favor upward pressure on futures prices. Meanwhile, as iron ore is a globally priced commodity, it stands to benefit even more from overseas interest rate cuts and an improving macroeconomic environment. With no significant expectations of declining demand ahead, raw material prices are likely to stay firm, providing strong support for steel prices as well.
Short-term steel prices continue their adjustment, with market sentiment largely driven by concerns over inventory levels and demand. However, considering the rise in exports, expectations for domestic policies at year-end, and supportive cost factors, there is limited downside potential for rebar and hot-rolled coil. As a result, steel prices are still expected to rebound in November.
