China: HRC, rebar prices fall in Jun’26 as manufacturing, construction demand slows

• HRC falls 2.2% m-o-m, rebar declines 3.3% as seasonal demand weakens
• Rising production fails to offset shrinking mill margins
• Negative profitability increases likelihood of maintenance shutdowns in July

Morning Brief: Chinese hot-rolled coil (HRC) and rebar prices corrected in June 2026 as seasonal weakness in manufacturing and construction demand outweighed the modest recovery in steel production. Average Tangshan HRC prices declined 2.2% m-o-m to RMB 3,437/t from RMB 3,514/t in May, while rebar prices fell more sharply by 3.3% to RMB 3,166/t from RMB 3,273/t. The steeper correction in rebar reflected weaker construction activity during the seasonal off-season, while HRC found relatively better support from manufacturing demand. However, the more significant development during the month was the rapid deterioration in mill profitability. Although pig iron and finished steel output increased 1.7% and 3.1% m-o-m, respectively, resilient raw material costs prevented production costs from declining alongside finished steel prices. By the end of June, both HRC and rebar production had slipped into losses, shifting market expectations towards supply-side adjustments rather than demand recovery as the principal driver of prices in July.

Snapshots of HRC, rebar price movements in Jun’26

Manufacturing demand cushions HRC, but margins deteriorate

Average HRC prices corrected by around RMB 77/t during June as downstream manufacturers continued restricting purchases to immediate requirements amid subdued export orders and cautious inventory management. Although blast furnace operations normalised after earlier maintenance-related disruptions and finished steel output increased, demand remained insufficient to absorb the additional supply, limiting mills’ ability to maintain May’s price levels. Weekly market activity also weakened towards month-end as transactions slowed and inventories remained comfortable.

The decline in finished steel prices contrasted with relatively resilient raw material costs, pushing HRC production into losses of nearly RMB 160/t by late June. The sustained margin compression has prompted a growing number of mills to consider maintenance shutdowns and output reductions during July, with supply discipline increasingly viewed as the primary mechanism for restoring market balance.

Construction slowdown weighs more heavily on rebar

Rebar prices fell by almost RMB 107/t during June, underperforming HRC as seasonal rainfall and high temperatures slowed construction activity across much of China. Project procurement remained largely need-based, while traders adopted a cautious stance amid expectations of further price weakness. The combination of softer transactions and adequate market supply kept prices under pressure despite broadly stable crude steel production.

Profitability deteriorated even more rapidly than prices. Rebar production moved into losses of around RMB 120/t by the end of June as weak finished steel prices failed to offset elevated iron ore and coking coal costs. With mills facing sustained financial pressure, production cuts and maintenance outages are expected to become increasingly common during July, particularly among producers operating with limited margins.

Outlook

Mill profitability is expected to remain the principal driver of China’s steel market through July. Seasonal demand is unlikely to recover materially in the near term, while raw material costs continue to offer limited relief to producers. As a result, widening losses are expected to accelerate maintenance shutdowns and production cuts, gradually tightening supply after June’s modest increase in output. Supply-side discipline could provide some support to HRC and rebar prices over the coming weeks, although any sustained recovery will ultimately depend on stronger manufacturing activity and a revival in construction demand rather than production restraint alone.