China: CISA calls for production cuts amid expectations of continued weak demand

• Semis exports may weaken as Iranian mills resume shipments
• Construction activity set to slow amid rainy season in south China

Japan Metal Daily: There is a growing view that steel production in China will reduce further in the second half of this year. The China Iron and Steel Association (CISA), which represents major steelmakers, has called for production cuts in expectation of continued weak domestic demand. This is set to be compounded by an expected decline in exports intended to replace Iranian steel, which had been propping up production at Chinese mills.

Since March, China’s exports, particularly of semi-finished products, have increased to compensate for Iranian steel exports disrupted by US and Israeli attacks. With the cessation of the conflict in Iran, Iranian steelmakers such as Mobarakeh Steel and Khuzestan Steel are reported to have resumed accepting orders. While production has not yet fully recovered, these steelmakers are expected to gradually resume shipments.

According to CISA, daily crude steel production by member companies in mid-June stood at 2.1 million tonnes (mnt), down 2% y-o-y. Production has remained at this level since April. However, there are differences among manufacturers, and it is expected that those that overproduced in the first half of the year relative to the government’s production targets for this year will make adjustments going forward.

Historically, China tends to “balance the books” with production adjustments in the second half of the year; last year, for example, Aoyama Holding Group and Nanjing Iron & Steel reported crude steel production levels that were roughly flat y-o-y.

As the rainy season begins in southern China, demand, particularly for construction materials, is expected to remain weak for the time being. Trading prices of hot-rolled coils (October contract) on the Shanghai Futures Exchange also fell to the low RMB 3,300/tonne (t) range last week, down nearly RMB 100/t from the beginning of the month. Production momentum is expected to wane as profitability deteriorates.

According to data from the National Bureau of Statistics, China’s crude steel production was down 3.9% y-o-y at 415.53 mnt in January-May 2026. Manufacturing investment growth rate slipped into negative territory this month, with the January-May 2026 value sliding to -0.40% y-o-y compared to 8.5% in the year-ago period and 4.1% in the first quarter of this year. Infrastructure investment growth slowed sharply to 0.6% in January-May from 4.3% in January-April, while real estate development fell 16.2% y-o-y.

Note: This article has been published in accordance with a content exchange agreement between BigMint and Japan Metal Daily.