The steel market in the sub-region experienced a mixed trend last week. In Shanghai, regional steel prices saw a slight decline, falling by RMB 20/ton from last Friday, and were reported at RMB 3,620/ton as of September 6. In Beijing, prices fluctuated slightly, with a reported price of RMB 3,650/ton on the same date, down by 30 yuan/ton compared to last Friday. Meanwhile, Guangzhou saw a sharper drop, with prices falling to RMB 3,910/ton, a decrease of 40 yuan/ton from the previous week.
According to the latest data, the average price of premium grade 35 rebar in major domestic markets was RMB 3,708/ton as of September 6, a marginal decrease of 2 yuan/ton from last Friday. The average price of 6.5mm high line remained stable at RMB 3,745/ton. Despite a positive start to the week driven by improved PMI data, steel futures quickly returned to a weak trend from Tuesday onward. Spot transactions declined, and the market became more cautious, with steel prices remaining under downward pressure.
Market activity showed some signs of recovery this week, with terminal purchase volumes in Shanghai increasing by 55.3% compared to the previous week. Although the market appeared to be rebounding from last week’s weakness, it was characterized by volatility—prices rose sharply on Monday but fell on Tuesday. Activity remained light on Wednesday and Thursday, before stabilizing on Friday. However, the overall volume still showed an upward trend. At the same time, supply chain disruptions and irregularities made it more difficult for buyers to secure goods.
Several factors influenced the domestic construction steel market last week. First, steel mill prices remained within a narrow range, with few adjustments made to ex-factory prices. Only a small number of mills adjusted prices based on contractual orders. For example, leading mills in East China reduced prices by 30 yuan/ton, while Shagang, Yonggang, and Nangang maintained stable pricing. With steel mill prices having been under pressure since late August, there is growing concern that mid-September could bring increased challenges for producers.
Second, raw material prices also showed limited fluctuations. As of September 6, the ex-factory price of ordinary carbon billet in Tangshan dropped by 20 yuan/ton to 3,130 yuan/ton. Scrap prices in Jiangsu fell to 2,620 yuan/ton, while coke prices in Shanxi rose by 20 yuan/ton to 1,150 yuan/ton. The price of 66% dry iron ore in Tangshan remained unchanged at 1,070 yuan/ton. Meanwhile, the Platts index for 62% iron ore fell by USD 3/ton to USD 136/ton.
Third, steel inventories continued to decline. As of September 6, total inventory of major domestic steel products stood at 14.41 million tons, a 1.25% weekly reduction. This marks the 25th consecutive week of inventory declines, with major cities like Shanghai and Hangzhou seeing a return to lower stock levels. Only Beijing and Guangzhou saw a rise in thread stock. Additionally, key steel stocks in the industry decreased by 379,500 tons year-on-year, reflecting strong demand and reducing pressure on prices.
Analysts highlight several factors that may shape the future direction of the steel market. First, steel mill production growth remains limited despite recent price rebounds. According to the China Steel Association, crude steel output in late August rose slightly to 2.119 million tons per day, but the pace of increase has slowed. This cautious approach by mills may reflect concerns over rising raw material costs, shrinking profit margins, and uncertain demand outlooks. However, this restraint could help maintain market stability in the coming months.
Second, steel exports have surged significantly. In August, China exported 6.14 million tons of steel, a 19.22% year-on-year increase. This marked the highest monthly export volume in nearly five years. The surge was driven by competitive pricing strategies from domestic mills and a modest recovery in European and American markets. These exports helped alleviate domestic supply pressures, particularly in the East China region, where discounts and short specifications were common.
Finally, overall economic indicators are showing improvement. In August, the CPI rose by 2.6% year-on-year, while the PPI fell by 1.6% year-on-year. After hitting a 16-month high, the manufacturing PMI signaled continued growth, and the PPI reached a six-month peak. These trends suggest that government policies are helping stabilize the economy, with positive signals emerging across multiple sectors.
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