Several uncertainties in the future of the steel industry
Led SAA Downlight,Led SAA Recessed Led Downlight,Led SAA Round Downlight,SAA Led Downlight Foshan Extrlux Co., Ltd. , https://www.extrlux.com
August 31 10:00:36, 2025
**Abstract**
In the early stages, favorable policies provided strong support to the market, creating high expectations for the Jinjiuyin sector. However, despite this optimism, there are still numerous uncertainties affecting market operations. These factors could directly influence the future direction of steel prices, making it crucial for all market participants to remain vigilant and closely monitor developments.
Looking at the first half of July through the first half of August, the steel market experienced a significant rally. This led to improved profitability for certain steel products, which in turn boosted production enthusiasm among steel mills. As a result, production speeds increased notably. According to data from the Steel Association, the average daily crude steel output in mid-August was higher than in July. It is expected that the monthly output in August will be even greater than that of July. This surge in production means more resources will be released into the market, potentially worsening the supply-demand imbalance that had only slightly eased in the previous period.
Moreover, as steel prices continued to rise in the previous round, raw material costs also surged. Imported iron ore prices increased significantly, outpacing the growth in steel prices. By the end of August, the price of 62.5% grade Newman fine ore at Qingdao Port had risen by RMB 50 per ton compared to the beginning of August, a 5.61% increase, or 11.9% higher than at the end of June. In contrast, the price of Grade III rebar had only risen by 1.96%, and the price of 4.75mm hot rolled coil had gone up just 1.79%. These figures show that the cost of imported ores has risen much more sharply than that of finished steel products.
Additionally, although the rebound in domestic mines and coal prices was not very dramatic, it was still noticeable. In August, coke prices rose from 30 yuan/ton to 80 yuan/ton. Furthermore, major coal-producing provinces such as Shanxi, Shaanxi, and Inner Mongolia are preparing to introduce new coal support policies. In response to the decline in the coke market, prices may continue to rise further.
With production costs rising significantly, steel companies are facing pressure on their profit margins.
While we do not rule out the possibility that downstream demand may improve further, driven by steady economic growth and supportive policies, the release of actual demand is still influenced by various factors. For example, large-scale projects like railway construction, urban rail transit, and slum renovation require substantial capital, which takes time to secure. This delay can affect project initiation and progress. 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 demand for steel in downstream industries is likely to grow gradually over time.
Furthermore, attention should also be paid to the financial health of steel companies during the third quarter.
In summary, the steel market is undergoing rapid changes. If steel mills fail to manage their production rhythms properly and if demand growth lags behind supply increases, the supply-demand imbalance could quickly intensify, leading to market instability. It is recommended that steel mills strictly adhere to production control and structural adjustment principles, carefully assess demand conditions, and work together to ensure a healthy and stable market environment.