Experts say city—September 21

My Steel: On the supply side, last week’s output of the five major steel product categories totaled 7.9414 million tonnes, up 6,000 tonnes from the previous week, a 0.01% increase. Given the substantial earlier decline in long‑product output, and with no widespread production cuts yet reported at steel mills, plants have shifted production to ease pressure on flat‑product supplies, resulting in structural changes in the overall output of the five major steel grades while total production remained virtually unchanged month over month. Meanwhile, total inventories of the five major steel products stood at 15.3773 million tonnes, down 168,800 tonnes week on week—a 1.1% decline, with the pace of destocking narrowing slightly compared with the prior week. Inventory levels across the five major product categories continued to fall, supported by the peak season and exhibiting a structurally synchronized de‑stocking trend. On the demand side, weekly apparent consumption of the five major steel product categories reached 8.1102 million tonnes, down 1.35% from the previous week: construction‑material consumption rose 3.3%, while flat‑product consumption fell 1.8%. Driven by seasonal factors and recent declines in steel prices, the increase in construction‑material demand was more pronounced than that for flat products. Overall, last week saw stable supply but weak demand, with total inventories continuing to decline and underlying fundamentals remaining neutral. Regarding supply, earlier sharp increases in coking coal and coke prices significantly squeezed mill margins; current spot profits for coil and rebar are both below –150 yuan per tonne, limiting room for further short‑term production hikes while expectations of output cuts remain relatively strong. On the demand front, we remain in the peak season, with the National Day holiday approaching, prompting some modest restocking activity downstream; thus, steel demand is likely to retain some resilience at the bottom in the near term. In summary, under the prevailing expectation of stable supply and weak demand, steel inventories are expected to continue declining in the short term, though the pace of destocking has not yet exceeded typical seasonal patterns, suggesting that current fundamentals offer limited upside for steel prices. Moreover, given the earlier surge in coal prices—which exerted cost‑push inflation on steel—recent signs of a temporary pullback in the coal‑price premium may keep steel prices subdued in the near term.

Steel Home: Last week, domestic steel prices generally saw only modest adjustments. Looking at recent market conditions, bullish factors include: first, most steel mills producing ordinary grades are posting losses, leading to increased production cuts and maintenance shutdowns, a decline in blast furnace operating rates, and some easing of supply-side pressure; meanwhile, inventories of the five major steel product categories continue to fall. Second, with the Mid-Autumn and National Day holidays approaching, downstream demand for restocking has picked up. On the downside, the main headwinds are: first, peak-season demand has fallen short of expectations, with downstream buyers showing limited willingness to absorb higher-priced materials; second, the Federal Reserve’s interest-rate hikes have tightened liquidity, exerting downward pressure on commodity markets, including black‑metal futures. Overall, the steel market is currently characterized by weak supply and demand amid broader macroeconomic headwinds. We expect domestic steel prices to continue trending slightly lower this week.

Lange: With the Federal Reserve resuming interest-rate hikes, ongoing geopolitical tensions in the Middle East, and rising global inflation and energy-supply risks, China’s economy is characterized by “three stabilities and two accelerations”: industrial value added has rebounded, consumption recovery remains sluggish, real-estate investment continues to face pressure, supply‑side easing has weakened, and market activity has been mixed. Under the influence of diminishing cost‑support pressures, domestic steel prices are expected to trend lower amid volatility this week.

Tang and Song Dynasties: Steel prices are expected to remain under pressure this week, with the overall market characterized by marginal supply contraction, structural demand recovery, and weakening cost‑supporting factors. Downside room on the supply side is limited; the peak “Golden September” season has fallen short of expectations, and pre‑holiday restocking has been driven primarily by opportunistic low‑price inventory builds for essential needs. Both mill and social inventories continue to decline, but the supply‑demand balance has yet to undergo any meaningful shift. On the raw‑materials front, the earlier strong bullish momentum in coking coal has eased, reducing cost‑supportive forces. With no robust fundamental catalysts in the near term and lingering volatility in futures markets, steel prices are likely to stay under pressure this week, with limited room for either significant upside or downside. For the rebar January contract, look for support around 3,080 and resistance near 3,140. Supply Outlook: Current pig iron output remains at a high level, with no large-scale, deep production cuts in sight. Steelmakers face limited profit pressures, making a sharp, concentrated reduction in output unlikely in the near term. Total steel production is expected to decline slightly, with long products trading at elevated levels and flat‑rolled products seeing modest cuts; supply will contract only marginally, resulting in a relatively slow downward trajectory. Demand Outlook: So far, demand during the “Golden September” period has been weaker than anticipated, with end‑users primarily engaging in essential,刚需 purchases. As the Mid‑Autumn and National Day holidays approach, the market is entering a pre‑holiday restocking window, which should provide some support for long‑product demand. Meanwhile, flat‑rolled product demand is likely to remain subdued, leading to an overall pattern of structural differentiation in demand. Inventory Expectations: With the holidays looming, downstream restocking at lower prices may generate a short‑term demand boost, but its impact on destocking will be limited. Total inventories are expected to continue declining, though the pace may remain constrained. Key Areas of Focus This Week: The international energy landscape following the Federal Reserve’s rate hike; developments in the Middle East geopolitical situation; progress in U.S.–China talks; domestically, monitoring the September LPR quote, closely tracking spot steel transaction volumes and export performance; as well as updates on Jincheng Coal’s resumption of production, customs clearance volumes at Mongolian coal border crossings, the pace of pre‑holiday restocking by end‑users, the intensity of steel inventory destocking, and changes in steel mill profitability and compliance with production‑control measures.

Zhuochuang Information: Steel prices are expected to trade at elevated levels this week, with potential for a corrective adjustment. Analyzing the underlying factors: on the supply‑demand front, downstream demand remains relatively sluggish, inventory destocking has slowed, and fundamentals remain weak, putting downward pressure on prices. Meanwhile, raw material costs remain high, providing strong support and underpinning price levels. In terms of market sentiment, caution and wait-and-see attitudes prevail, though confidence has improved compared with last week. According to a survey by Zhuochuang Information, this week’s steel industry confidence index stands at 50.15, up 2.83 percentage points from the previous reading.

Han Weidong: The market has entered a pre-holiday phase of volatile, choppy trading; traders can simply focus on prudent operations over the holiday period. With prices currently neither carrying significant risks nor offering clear speculative opportunities, the steel industry has slipped into a period of widespread losses. Production is likely to remain tightly constrained, and producers are strongly inclined to support prices. Even the China Iron and Steel Association’s leading dozen or so mills have jointly called for output cuts, suggesting that market sentiment will remain rangebound and relatively stable. Judging from the recently released data on output and apparent demand for the five major steel products, current levels are broadly unchanged from four weeks ago. The production figures reflect steelmakers’ hesitancy to further curtail output, while the demand numbers underscore the market’s sense of helplessness. However, it’s important to note that both output and demand have declined sharply year-on-year, with supply and demand both weak—consistent with the year-over-year drop in major investment indicators. Based on current hot metal output, it remains feasible to work together to stabilize prices at their present level, but reversing the industry-wide loss-making trend appears highly unlikely. More substantial production cuts will be essential. Going forward, key attention should be paid to trends in hot metal output and any emerging low‑price opportunities.

Zhang Guangzhi, Deputy General Manager of Marketing at Youfa Group: As the autumn equinox approaches and the peak “Golden September” season enters its final week, the steel market has followed a typical pattern of initial gains followed by a pullback. Early in the week, the China Iron and Steel Association’s call for production cuts bolstered expectations of policy support, driving a three-day rally on the futures front. However, subsequent U.S. Federal Reserve rate hikes and the implementation of coal‑supply‑guarantee measures sent coking coal and metallurgical coal prices sharply lower; on Friday, coking coal plunged more than 6% in a single day, while rebar fell below 3,100 yuan per ton. The logic articulated last week—that “costs have peaked and market elasticity remains limited”—continued to play out: the three-day rebound spurred by favorable policies was entirely erased by a collapse in raw‑material prices, wiping out all of the week’s gains.

As of the afternoon of September 18, rebar futures for January 2027 were trading at RMB 3,099 per tonne, while hot-rolled coil for January 2027 stood at RMB 3,298 per tonne, both posting modest weekly declines. Meanwhile, coking coal and coke futures for January 2027 tumbled more than 4.7% week-on-week, reflecting a pattern of slight price drops in finished steel products and sharper adjustments in raw material prices. Inventory continued to decline, with total stocks of the five major steel products reaching 15.3773 million tonnes, down 168,800 tonnes from the previous week.

I. Cost Side: The latest round of coking coal price hikes has come to an end.

The fifth round of coking coal price hikes, implemented on September 10 and totaling RMB 450–495 per ton, marks the end of this round of raw‑material price increases. With coal supply‑guarantee measures gaining traction, Mongolian raw coal failing to sell at auction and prices falling, and mainstream Shanxi coal grades cut by RMB 100 per ton, three adverse factors have collectively eroded the last vestiges of support for raw‑material prices. At present, coal remains structurally tight—56 Shanxi coal mines are shut down, and daily customs clearance volumes of Mongolian coal remain subdued—but the market’s pricing rationale has now reversed entirely.

II. Supply Side: Production‑control policies have been implemented, but output cuts have yet to materialize.

On September 15, the China Iron and Steel Association, together with 45 steelmakers, issued an initiative to curb production and reduce inventories, aiming to underpin market policy support. However, actual output has not contracted in tandem; daily molten iron production stood at 2.3763 million tonnes, edging up slightly week-on-week. Steel mills are facing severe operational pressures, with industry profit margins at just 7.79% and more than 90% of companies reporting losses, highlighting a pronounced divergence between policy-driven production cuts and actual output levels.

III. Demand Side: Sales have seen a brief rebound, but the strength of the peak season remains limited.

Using a daily steel‑building‑materials turnover of 100,000 tonnes as the demand threshold, this week’s trading volume only met that level on a short‑term basis. The highest single‑day volume reached 109,300 tonnes, but by Thursday it had swiftly declined to 84,900 tonnes, marking a sharp month‑on‑month drop of 22.32%. Product‑type differentiation was pronounced, with rebar outperforming coil: apparent rebar demand saw a modest rebound, while apparent hot‑rolled coil demand continued to weaken. Overall apparent demand across the five major steel products edged lower week over week, reflecting broadly subdued end‑user demand.

Outlook: In the near term, the steel market is expected to remain volatile and generally weak, trading within a narrow range. Reference ranges: rebar contract 2610 at RMB 3,040–3,120 per ton, and contract 2701 at RMB 3,080–3,160 per ton. Going forward, key factors to watch include the pace of recovery in coking coal supply, the effectiveness of steelmakers’ production‑control measures and the extent of the decline in hot‑metal output, as well as the sustainability of construction‑material sales driven by pre‑holiday stocking ahead of the Mid-Autumn and National Day holidays. In addition, the September 21 LPR rate announcement represents an important short‑term policy window that warrants close attention.

Previously, we defined a daily steel‑building‑materials turnover of 100,000 tonnes as the critical threshold for gauging demand strength. This week, demand only briefly reached that level but failed to sustain its upward momentum. On Tuesday and Wednesday, average daily steel‑building‑materials sales rebounded, with volumes climbing to 109,300 tonnes on September 18; however, underlying demand proved weak, and by Thursday, trading had swiftly slipped back to 84,900 tonnes—a day‑on‑day drop of 22.32%, once again underscoring the sluggishness of peak‑season demand. In the short term, the steel market is likely to remain rangebound, trading in a generally subdued and volatile environment.