In mid-October, China’s domestic steel market remained characterized by weak supply and demand, with production costs providing a price floor. Crude steel output at major steelmakers declined month on month, and mill inventories fell significantly, easing supply pressure. However, the recovery in end-user demand remained limited, steel transactions lacked momentum, and flat steel inventories continued to accumulate. Market participants believe that steel prices are mainly supported by expected production cuts amid mill losses and resilient raw material costs, while weak demand and inventory pressure limit further gains. In the short term, steel prices are likely to fluctuate within a narrow range, with different products showing varied performance.
According to the China Iron and Steel Association (CISA), average daily crude steel output at key member steelmakers stood at 1.881 million tonnes in late September 2026, down 2.1% from the previous reporting period. Steel inventories totaled 15.65 million tonnes, a decrease of 1.43 million tonnes, or 8.4%.
“The simultaneous decline in output and inventories indicates that steelmakers are adjusting production in response to low profit margins and weak demand,” said a steel industry analyst. Production incentives remain limited, and supply cuts are providing some support for steel prices. However, these figures do not necessarily indicate a fundamental improvement in supply-demand conditions. Inventory declines also reflect changes in logistics and settlement schedules around the holiday period. Whether mill and social inventories continue to fall will require further observation.
Cross-regional shipments of construction steel from Northeast China declined significantly year on year in October. Planned rebar shipments totaled 175,000 tonnes, down 132,000 tonnes from a year earlier, while planned shipments of wire rod and bar-in-coil products reached 125,000 tonnes, a decrease of 138,000 tonnes.
Market participants attribute the decline mainly to narrowing price differences between northern and southern markets. In early October, the rebar price spread between Beijing and Shenyang was approximately RMB 20 per tonne, compared with RMB 83 per tonne between Shanghai and Shenyang and RMB 60 per tonne between Guangzhou and Shenyang. These margins were insufficient to cover transportation costs to many southern destinations. Consequently, Beijing became the main destination for construction steel shipped from the Northeast, while shipments to Shanghai and Guangzhou declined. With seasonal demand weakening and mill profits remaining under pressure, southbound shipments from Northeast China are expected to stay low in November.
This trend suggests that steel distribution across regions is increasingly influenced by profitability and logistics costs rather than price differences alone. Reduced supplies from the Northeast may ease pressure in some East and South China markets, while narrower regional price gaps indicate a gradual reduction in resource allocation imbalances.
On October 10, the average price of 20 mm Grade III seismic-resistant rebar across 31 major Chinese cities was RMB 3,322 per tonne, up RMB 6 from the previous trading day. The average price of 4.75 mm hot-rolled coil across 24 major cities also rose RMB 6 to RMB 3,298 per tonne. The average prices of 20 mm medium plate and 1.0 mm cold-rolled coil increased by RMB 1 to RMB 3,536 and RMB 3,783 per tonne, respectively.
Although prices have stabilized, trading activity remains inconsistent. On the first trading day after the holiday, construction steel transactions among 237 major traders totaled 114,000 tonnes. On October 10, iron ore transactions at major ports reached 583,000 tonnes, down 26.11% from the previous period, while construction steel transactions fell 20.98% to 90,100 tonnes.
Market participants noted that purchasing remains largely driven by essential demand, with limited speculative activity. A single-day rebound in transactions does not demonstrate a sustained recovery in end-user demand. Without consistent growth in trading volumes, steel prices may face renewed downward pressure. By product category, rebar benefits from cost support and reduced regional supplies. Hot-rolled coil faces weak downstream restocking and rising inventories, making a weak, range-bound trend likely. Medium plate faces weakening supply and demand, although inventory pressure remains manageable. Cold-rolled coil continues to experience weakness on both sides, with prices expected to remain relatively stable under downward pressure.
The iron ore market shows rising port inventories but falling steel mill inventories. Total imported iron ore inventories at 47 major ports reached 173.1452 million tonnes, up 963,400 tonnes from the previous period. Inventories at 45 major ports totaled 164.8022 million tonnes, an increase of 693,800 tonnes. Meanwhile, imported iron ore inventories at steel mills nationwide fell by 7.8301 million tonnes to 88.1004 million tonnes.
Port supplies remain relatively ample, while steelmakers are reducing raw material inventories and controlling purchases amid weak profitability. If hot metal production continues to decline, iron ore prices will remain under pressure. However, current cost support makes a sustained sharp decline less likely.
The coke market is also facing price reductions. On October 9, some steelmakers initiated a second round of cuts, lowering wet-quenched coke prices by RMB 100 per tonne and dry-quenched coke prices by RMB 110 per tonne, scheduled to take effect on October 12. Lower coke prices may improve steelmakers’ margins, but weak end-user demand could limit any resulting increase in production.
Operating pressure on steelmakers continues to increase. A representative of Shagang Group noted that the industry faces severe challenges as domestic demand declines and international trade frictions intensify. Zhang Tianfu, president of Jinnan Iron and Steel Group, also believes the industry has entered a period of deep competition, with fewer opportunities to profit simply from favorable market conditions. Companies must focus on lean management, cost control, and execution to maintain stable operations.
Industry observers generally agree that slower demand growth and intensifying competition among similar products are reducing opportunities to generate profits through rising market prices alone. Future competitiveness will increasingly depend on cost management, product mix optimization, capital efficiency, and regional customer service.
Overall, China’s steel market in mid-October remains influenced by both positive and negative factors. Production losses and declining crude steel output provide price support, while slow construction steel demand, accumulating flat steel inventories, and inconsistent purchasing limit recovery. Infrastructure projects and economic stabilization measures may offer additional support, although time is needed for policy measures to translate into actual construction activity. Meanwhile, diverging iron ore and coke prices continue to affect production costs, mill profitability, and inventory decisions.
Note: All steel and raw material prices cited are based on publicly available spot market quotations. Actual prices may vary by region, brand, and settlement terms. This article does not constitute trading or investment advice.
