- Falling raw material prices to weigh on steel prices
- Chinese mills expected to curb output amid losses
Following last month’s steady declines, Chinese steel prices could continue dipping lower in October 2026 from a possible drop in raw material prices, according to Mysteel’s chief analyst Wang Jianhua in his latest monthly outlook. On the other hand, the favourable macroeconomic backdrop and easing supply-side pressure seem likely to provide some support.
On 30 September, Mysteel assessed China’s composite steel price at RMB 3,461.29/tonne (t) ($517.2/t) including the 13% VAT, lower by RMB 48.62/t or 1.4% from a month earlier. Entering this month, the price had slipped further to RMB 3,447.61/t as of 9 October.
Domestic prices of coking coal and metallurgical coke pulled back in September after surging in August, causing the cost support for steel prices to waver last month, Mysteel’s survey showed. The downtrend will likely continue in October, given that the decline in spot coking coal and coke prices has been far smaller than that in their futures contracts, Wang predicts. Moreover, the central government has signalled its intent to stabilise coal supply and curb price volatility.
By 30 September, China’s national composite coking coal spot price had fallen 1.3% on month to RMB 2,135.3/t including the 13% VAT and by 9 October had slid further to RMB 2,058/t, according to Mysteel’s assessment. The price is still hovering at the highest level since January 2024.
In the futures market, the most-traded coking coal contract for January delivery on the Dalian Commodity Exchange closed at RMB 1,449/t on 30 September, lower by 14.6% from the settlement price on 31 August.
On fundamentals, China’s steel market remains in the traditional peak consumption season in autumn, meaning that steel demand is expected to expand further this month amid improved building activity across the country, Wang maintains. However, the growth in steel use may not be significant given the persistently dull property market, Mysteel’s survey suggests.
During September, the total trading volume of construction steel including rebar, wire rod, and bar-in-coil across the 237 Chinese trading houses under Mysteel’s tracking averaged some 94,093 t/day, lower by 7.7% compared with the same month last year.
Nevertheless, Chinese steel producers are expected to rein in output this month, as high costs have pushed many mills into the red, Wang predicted. This will further loosen domestic steel supply and help underpin steel prices, he added.
During 1-8 October, the total volume of hot metal produced by the 247 blast furnace (BF) steelmakers under Mysteel’s tracking had fallen 1% from a month earlier to 2.34 million tonnes/d (mnt/d) on average, while only around 7% – some 17 firms – of these sampled mills could make some profits on steel sales.
With steel output falling and demand expected to recover, steel inventories in the market are likely to shrink further throughout October, Wang observed.
As of 8 October, the total stocks of the five major carbon steel products – rebar, wire rod, hot-rolled coil, cold-rolled coil, and medium plate – held by steelmakers and trading houses across the 35 Chinese cities under Mysteel’s tracking had slid to 15.5 mnt – some 3.3% lower than the year-ago level.
On the other hand, at recent meetings the central government has called for urgent efforts to implement various macroeconomic policies and for earlier starts to be made on major construction projects, Wang noted. This is expected to give a boost to the economic environment in October and provide some support for steel prices, he said.
Under such circumstances, while China’s steel prices remain under pressure, there is still room for a rebound in October, Wang believed.
Note: This article is published as part of a content exchange agreement between Mysteel and BigMint.
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