- CISA urges production controls amid weakening steel demand
- Steel inventories rise as output increases after National Day
Self-imposed production controls and inventory reduction are key to keeping the steel market operating steadily, the China Iron & Steel Association (CISA) stresses in its latest monthly report.
Domestic steel demand still faces severe downward pressure, the association warned. The latest forecast of the World Steel Association (WSA) released in mid-October showed that China’s steel demand may decline by 2% in 2026, a steeper contraction than the projection in April.
Declining real estate investment may continue to weigh heavily on traditional construction steel demand, while the growth from new energy and high-end equipment sectors has been slower than expected, and is not yet enough to offset the decline in traditional demand, CISA pointed out.
The association said that uncertainty on both the supply and demand sides is expected to rise from late October to November, when weakening demand overlaps with winter stockpiling expectations. If Chinese steel mills blindly resume production, they are likely to repeat the passive situation of “more output but no better efficiency”, dragging down steel prices and worsening industry losses.
China’s crude steel output increased in early October, with daily production among CISA’s member steel mills reaching 1.94 million tonnes/day (mnt/d) on average over 1-10 October, rising by 3.1% from late September, according to the report.
Inventories of the five major steel items comprising rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plate held by CISA’s member mills mounted accordingly, with the total tonnage jumping by 8.4% from the end of September to reach 16.97 mnt as of 10 October.
Steel stocks at traders’ warehouses also accumulated due to the impact of the week-long National Day holiday that ended on 7 October. As of 10 October , steel inventories of the five steel items at traders’ warehouses across the 21 Chinese cities under CISA’s regular tracking registered 9.39 mnt, increasing by 2.7% from ten days earlier.
CISA suggested in the report that domestic steel mills should pay close attention to the actual recovery of end-use demand, especially changes in funding availability for real estate projects, physical construction workloads in infrastructure, and manufacturing orders, so as to avoid a worsening of supply-demand imbalances caused by expectation gaps.
The association advised mills to set production based on sales, to proactively control output, and keep inventories at reasonable levels, while closely monitoring other mills’ winter stockpiling policies and the pace of coke price cuts to avoid easing production discipline amid short-term profit recovery.
On the demand side, however, CISA suggested that increased fiscal and monetary policy support for infrastructure investment at home may provide a temporary boost to steel demand. In addition, the National Development and Reform Commission is also working on an implementation plan for expanding domestic demand.
On the supply side, as a traditional industry, China’s steel sector is expected to receive policy support for its transition toward high-end, digital and intelligent, and green development. The direction of supply-side optimization has been further clarified, moving from “reducing volume” to “reducing volume while improving quality”, CISA noted.
On the global front, global economic growth has slowed but remains resilient, CISA said. The Organization for Economic Co-operation and Development (OECD) forecast in late September that global growth this year could reach 2.9%, up 0.1 percentage point from its previous forecast in early June, as large oil inventories, additional supply from outside the Gulf economies, and discretionary government support measures are helping to cushion the impact of the conflict in the Middle East.
The OECD’s view was broadly consistent with the latest forecast from the International Monetary Fund in mid-October, which raised its 2026 global growth projection by 0.1 percentage point to 3.1% from its July estimate, CISA observed.
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