Chinese steel prices, particularly rebar futures, have plummeted to around CNY 3,000 per ton in early August, marking their lowest level since June 2025. This sharp decline is primarily attributed to a persistent downturn in China's property sector, which accounts for approximately one-third of the country's steel consumption and the majority of rebar usage. Industry data indicates that average losses for steel mills in Tangshan have exceeded CNY 100 per ton and are expected to worsen, signaling continued pressure on the sector.
Weak demand in both domestic and overseas markets is a significant contributing factor. China's manufacturing activity slowed to a four-month low in July, further dampening the demand outlook. Despite scaling back output, domestic steel supply continues to outstrip demand, leading to rising inventories. Mysteel's chief analyst, Wang Jian, predicts that prices will continue to track lower in the coming month due to subdued demand and potential declines in raw material prices like iron ore and coke. As of July 29, Mysteel PORTDEX 62% Australian Fines were at Yuan 698/wmt FOT, down 1.7% from the previous month, while China's national composite price for coke fell 1.3% to Yuan 1749/t.
The national composite steel price, as assessed by Mysteel, averaged about Yuan 3,438/tonne ($509/t) in July, a 1.9% decrease from June. Total inventories of major carbon steel products across 35 Chinese cities increased by 0.8% month-on-month to 16.4 million tonnes as of July 30, a substantial 21% higher than end-July last year. This oversupply persists despite efforts by steelmakers to reduce production; hot metal output among 247 blast furnace steelmakers dropped for four consecutive weeks to 2.36 million tonnes/day by late July, 3.2% lower than the previous month. However, this reduction is not enough to ease supply pressure, which would require output to be no higher than 2.32 million tonnes/day.
Policymakers in Beijing, during the Politburo meeting, refrained from introducing major new stimulus measures, instead focusing on existing fiscal policies to support the slowing economy. While substantial infrastructure spending on power plants and grids provides some support, it is insufficient to offset the weak construction and manufacturing demand. New home prices continued to contract in June, and construction starts by floor area fell 23.4% year-on-year in the first half of 2026. Domestic steel output totaled 500 million tonnes in the first half of the year, approximately 3% below 2025 levels, further highlighting the demand-supply imbalance.
