In May 2026, the slowdown in global economic recovery and volatile commodity prices created clear structural differences in China’s steel market. Prices first rose and then fell. Although steel mills stayed profitable for two months, profits dropped sharply, with total profits down more than 30% year-on-year in the first five months.
The industry showed a “cut production to maintain profits” pattern. Output of crude steel and pig iron declined, helping offset weak demand. However, high raw material costs remained a major challenge, with operating costs reaching about 95% of revenue, leaving very thin margins.
Demand clearly shifted to “strong manufacturing, weak construction.” Real estate slowdown and tighter local government debt control reduced infrastructure activity, weakening demand for construction steel like rebar.
In contrast, sectors such as new energy, equipment, shipbuilding, and home appliances continued to grow, supporting demand for flat steel products.
During the June–July off-season, construction demand is expected to hit its yearly low due to heat and rain. Long steel prices will likely stay weak with rising inventory, while flat steel demand remains stable due to policy support. The price gap between the two will continue to widen.
Overall, the market is entering a structural bottom phase. Steel firms will need to reduce low-margin products and focus on higher-value steel to maintain profitability.