China: Steel prices may soften in Sep’25, says NDRC

• Oversupply to weigh on prices despite rise in demand
• Profit margins may shrink amid increase in sales costs

Mysteel: China’s steel prices are expected to come under pressure in September and cancel out last month’s gains, mainly because supply remains loose. This is according to the most recent survey of the steel sector’s health conducted by the National Development and Reform Commission (NDRC), which covered major wholesale steel markets in South China, Shanghai, and Tianjin.

The NDRC says that domestic steel prices should weaken modestly this month. This follows its latest survey, which showed a softening in market sentiment compared to August.

The survey assessed six key indices, with the Sales Price Expectation Index falling back below the 50% threshold to 48.9% and marking a drop of 7.3 percentage points from the month prior. This suggests that market participants are rather pessimistic regarding prices.

In contrast, the Purchase Price Expectation Index continued to outperform and stood at 56% for this month, despite a decline of 4.1 percentage points from August.

The survey results showed that the steel market is upbeat about demand in September — typically a peak demand month for most sectors — and points to sales volumes increasing noticeably. This is reflected in the NDRC’s Sales Volume Expectation Index for this month, which increased by 9.6 percentage points from August to 64.3%.

The significant improvement in sales looks set to reduce inventories in turn. In response, the Inventory Expectation Index is seen dropping to 43.9%, a decline of 11.9 percentage points from the previous month.

The survey respondents expect the cost of selling steel products to rise further in tandem with purchasing prices, even as the increase will likely slow down significantly compared to last month. Likewise, a rise in the cost of sales spells smaller profit margins.

Consequently, the Sales Cost Expectation Index stood at 58.57%, down by 9.7 percentage points m-o-m. Meanwhile, the Sales Profit Margin Expectation Index remained below the 50% threshold at 38.3%, showing an m-o-m decrease of 3.4 percentage points.

Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.