Several uncertainties in the future of the steel industry
LED Dial Flood Light,LED Dial Spotlight,LED Dial Downlight,LED Dial Track Light Foshan Extrlux Co., Ltd. , https://www.extrlux.com
August 31 09:11:30, 2025
**Abstract**
In the early stages, favorable policies have fueled high expectations for the Jinjiuyin market. However, despite this optimism, there are still numerous uncertainties that could significantly impact the future direction of steel prices. All market participants should closely monitor these factors as they may influence the overall stability and performance of the sector.
During the first half of July through the first half of August, the steel market experienced a strong rally, which led to improved profitability for certain steel products. This boost in profits encouraged steel mills to increase production, resulting in a noticeable acceleration in output. According to data from the Steel Association, the average daily crude steel output in mid-August was higher than that in July. It is expected that August’s monthly output will surpass that of July, leading to a greater supply of steel on the market. This could worsen the already slight improvement in the supply-demand balance, potentially causing further strain.
Additionally, as steel prices continued to rise in the previous round, raw material costs also surged. Imported iron ore, in particular, saw a much steeper price increase compared to steel itself. After a brief correction in late August, the price of imported iron ore remained at its previous high level. By the end of August, the price of 62.5% grade Newman fine ore at Qingdao Port had risen by RMB 50 per ton since the start of August, an increase of 5.61%. This was 11.9% higher than the price at the end of June. Meanwhile, the price of Grade III rebar had only increased by 1.96%, and hot rolled coil prices rose by just 1.79%, far behind the sharp increases seen in imported ores.
Domestic coal and mine prices also rebounded slightly in August. The coke market, for instance, climbed from 30 yuan per ton to 80 yuan per ton. Moreover, major coal-producing provinces such as Shanxi, Shaanxi, and Inner Mongolia are preparing to introduce new support policies. In response to the recent decline in coke prices, it is likely that prices will continue to rise.
With rising production costs, steel companies' profit margins are under pressure. While we acknowledge that downstream demand might improve due to steady economic growth and supportive policies, the actual release of demand is still subject to various factors. For example, large-scale infrastructure projects like railway construction, urban rail transit, and shantytown renovation require significant funding, which takes time to secure. This delay could slow down project initiation and development. Additionally, new energy efficiency standards for the home appliance industry will take effect in October, prompting short-term adjustments in production lines. As a result, the release of steel demand from downstream industries is expected to be gradual and prolonged.
Furthermore, the financial health of steel companies during the third quarter should not be overlooked. With rising input costs and uncertain demand, maintaining liquidity and managing cash flow will be critical.
In summary, the steel market is experiencing rapid changes. If steel mills fail to manage their production schedules effectively, and if demand continues to lag, the imbalance between supply and demand could quickly escalate, leading to market instability. It is strongly recommended that steel mills adhere to production control strategies, adjust their product structures accordingly, and carefully assess market conditions to help maintain a stable and healthy market environment.