[Steel Weekly Report] Steel prices are expected to fluctuate mildly upward in April, with limited room for further gains.

(Source: CFC Metal Research)

Analyst | Chu Xinli, CICC Futures Research and Development Department

Research Assistant | Yang Chenyu Hu, CICC Futures Research and Development Department

Research Assistant | Liu Xinghua, CICC Futures Research and Development Department

Report completion time | March 27, 2026

Futures trading advisory business qualification: CSRC License No. [2011] 1461

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Abstract

In March, the steel market showed the characteristics of “cost push higher, demand weak recovery,” with overseas macro risks becoming the main variable. In the first half of the month, due to factors such as a slower-than-usual pace of work resumption after the Spring Festival and increased rainy weather in Southern China, terminal procurement demand remained subdued, social inventories continued to accumulate, and spot quotations edged up while lacking strength. Entering the second half of the month, as downstream work resumption advanced steadily, both supply and demand sides showed an increase, spot inventories reached a turning point, and support from production costs strengthened. As a result, steel prices gradually stabilized and posted a modest rebound. Judging by price performance, differentiation among product types was clear: by late March, rebar prices in the Shanghai region were maintained at around 3210 yuan/ton, with only small fluctuations versus the beginning of the month. Hot-rolled coil prices were relatively firm, while prices for high-end products such as cold-rolled and medium-thick plate increased somewhat. This differentiation reflects that steel demand from the manufacturing sector is relatively stable, while steel demand for construction is clearly affected by the real estate sector’s drag. From the steel mills’ side, leading enterprises such as Baoshan Iron & Steel Co., Ltd. and Ansteel Group raised the base prices for products including hot-rolled, cold-rolled, and medium-thick plate for April by 200 yuan/ton in general, indicating a cautiously optimistic stance toward demand in the future.

Based on a comprehensive assessment of both bullish and bearish factors, we expect the April steel market to show the characteristics of “volatile and slightly stronger, with limited room.” The core logic is that rigid cost support limits downside for steel prices, but lack of strong demand recovery constrains the upside. Overseas macro risks may increase market volatility. We suggest market participants remain cautious. Traders should seize the timing when prices rise to actively ship goods and reduce inventory levels, avoiding blindly chasing price increases and stockpiling. They may use futures-spot hedging to lock in profits. Downstream steel-using enterprises are advised to focus on procurement based on actual needs and selectively replenish inventories on pullbacks. For the rebar 2605 contract, focus on the 3100–3200 yuan/ton trading range. For the hot coil 2605 contract, focus on the 3250–3350 yuan/ton range. In the short term, take a “volatile and slightly stronger” view, but it is not advisable to chase rallies or sell aggressively.

Risk Alerts:

Geopolitical conflict beyond expectations: If the Iran–US conflict continues to escalate or expand, it will further push up energy prices and sea freight costs, and may also affect China’s steel exports.

Federal Reserve policy beyond expectations: If U.S. inflation remains above expectations, the Federal Reserve may keep high interest rates for a longer time, and even raise rates further, suppressing global demand.

Domestic demand below expectations: If infrastructure funding is not in place as expected or real estate sales remain sluggish, the pace of demand recovery may be weaker than expected.

Supply release beyond expectations: If steel mill profits improve and they rapidly expand production, it could break the weak supply-demand balance.

Main Text

I. Rebar

1.1 Rebar supply: Slight production cuts in both long and short processes

On the supply side, as of March 27, the supply of the week’s five major steel product categories was 8.3958 million tons, a slight week-on-week decrease of 0.024 million tons. This week’s rebar output decreased by 0.546 million tons. From the process perspective, both long and short processes reduced production. This week, the long-process output decreased by 0.401 million tons to 16.521 million tons; the short-process output decreased by 0.145 million tons to 3.266 million tons. As of March 27, in the East China region, the spot profit of long-process rebar per ton was around 50 yuan/ton; around the break-even line for East China valley electricity.

1.2 Rebar demand by visible demand: Demand gradually recovering

On the consumption side, as of March 27, rebar visible demand recovered to 2.2537 million tons, up 0.502 million tons year-on-year based on the lunar calendar. After the Spring Festival holiday ended, work resumption accelerated, and demand for construction steel at the terminal level was gradually released.

1.3 Rebar inventories: Mill inventories falling quickly; social inventories depleting more slowly

On inventories, as of March 27, total inventories of the five major steel product categories were 18.9784 million tons, a week-on-week drop of 4.839 million tons. Among total inventories of the five major categories, rebar and wire rod saw week-on-week decreases. This week, total rebar inventories decreased by 0.275 million tons to 8.6191 million tons. Rebar mill inventories decreased by 0.1704 million tons, while social inventories decreased by 0.1046 million tons to 6.4275 million tons.

II. Hot-Rolled Coils

2.1 Hot coil supply and demand: Both supply and demand increase; fundamentals of the plate market improve somewhat

As of March 27, hot-rolled output rebounded by 0.54 million tons to 3.0561 million tons, visible demand increased by 0.312 million tons to 3.1363 million tons, down by 0.044 million tons year-on-year based on the lunar calendar, a decrease of 1.38%. Currently, hot coil demand has recovered well. With both supply and demand increasing, fundamentals have improved.

2.2 Hot coil inventories: No major pressure at mill level; watch the pace of social inventory de-stocking

As of March 27, total hot coil inventories decreased by 0.0802 million tons to 4.5327 million tons. Mill inventories decreased by 0.0111 million tons, and social inventories decreased by 0.0691 million tons to 3.6942 million tons. At present, steel mills deliver sold inventory to the market, but the market is replenishing with relatively limited resources. Downstream demand has rebounded somewhat, but transaction volume has increased slowly, and the social inventory de-stocking speed is relatively slow.

III. Outlook for April Steel Prices

In March, the steel market showed the characteristics of “cost push higher, demand weak recovery,” with overseas macro risks becoming the main variable. In the first half of the month, due to factors such as a slower-than-usual pace of work resumption after the Spring Festival and increased rainy weather in Southern China, terminal procurement demand remained subdued, social inventories continued to accumulate, and spot quotations edged up while lacking strength. Entering the second half of the month, as downstream work resumption advanced steadily, both supply and demand sides showed an increase, spot inventories reached a turning point, and support from production costs strengthened. As a result, steel prices gradually stabilized and posted a modest rebound. Judging by price performance, differentiation among product types was clear: by late March, rebar prices in the Shanghai region were maintained at around 3210 yuan/ton, with only small fluctuations versus the beginning of the month. Hot-rolled coil prices were relatively firm, while prices for high-end products such as cold-rolled and medium-thick plate increased somewhat. This differentiation reflects that steel demand from the manufacturing sector is relatively stable, while steel demand for construction is clearly affected by the real estate sector’s drag. From the steel mills’ side, leading enterprises such as Baoshan Iron & Steel Co., Ltd. and Ansteel Group raised the base prices for products including hot-rolled, cold-rolled, and medium-thick plate for April by 200 yuan/ton in general, indicating a cautiously optimistic stance toward demand in the future.

Overseas macro risks became an important variable for the March market. Escalation of geopolitical conflict in the Middle East led international oil prices to break above 110 USD per barrel, significantly pushing up sea freight and energy costs and providing support to steel prices through a cost pass-through mechanism. However, the failure of Federal Reserve rate-cut expectations and the continuation of a global high-interest-rate environment have also suppressed overseas steel demand, increasing uncertainty around exports. The interweaving of these bullish and bearish factors has caused higher volatility in the steel futures market, making it more difficult to operate in the spot market.

Against the backdrop of accumulating overseas risks, domestic macro policy places even greater emphasis on “progress while maintaining stability.” In the 2026 Government Work Report, it is clearly stated that steel production capacity will be reduced in an orderly manner, promoting supply-demand balance and structural optimization, and that measures will be comprehensively used to rectify “involution-style” competition. This policy direction is of great significance for the steel industry. It indicates that structural supply-side reform is entering a new stage, shifting from purely reducing capacity toward placing more emphasis on structural optimization and high-quality development. In January and February, domestic crude steel output was 160.34 million tons, down 3.6% year-on-year, leaving room for a reduction for the full year, which helps restore supply-demand balance and steel profitability per ton. Real estate market policies continue to be optimized. Shanghai further optimized real estate policies, and relevant departments clarified that newly added land for construction shall not, in principle, be used for operating real estate development. Many cities adjusted provident fund loan policies. As a result, the real estate market is trending toward stability. The “Shanghai Seven Rules” have been implemented for a full month, and secondary residential transactions have clearly increased in volume. These policy measures help stabilize market expectations and provide bottom support for steel demand.

Overall, in March the macro environment showed the features of “domestic policy providing support while overseas risks accumulate.” Domestic stabilizing-growth policies provide bottom support for steel prices, but overseas macro factors add uncertainty to the market and have become the core variable breaking the weak balance.

On the industry side, in March the steel supply side showed a steady rebound. As of March 27, 247 steel mills’ blast furnace daily average hot metal output reached 23.109 million tons, up 2.94 million tons month-to-month. Steel mills’ profitability has improved but remains at a low level. As of late March, steel companies’ profit margins were 43.29%, up 3.46% month-to-month. Although profitability expanded somewhat, fewer than half of steel companies were profitable. The industry as a whole has not yet reached a turning point in profitability improvement. This profitability condition constrains a major expansion on the supply side and provides some degree of supply constraint to the market.

On the demand side, there is structural differentiation, with infrastructure support playing a clear role. Infrastructure investment in January and February grew 11.4% year-on-year and remains a core support for steel demand. The real estate market continues to drag on steel demand. In January and February, national real estate development investment was 961.2 billion yuan, down 11.1% year-on-year; the floor area of newly started construction for housing was 50.84 million square meters, down 23.1%; and the construction area was 5353.72 million square meters, down 11.7%. The huge gap in steel demand for real estate cannot be fully offset by infrastructure alone. Steel demand from the manufacturing sector is relatively stable, but export tailwinds have faded. In January and February, manufacturing investment grew only 3.1%, and the recovery pace was mild. The auto industry shows differentiation in performance: in February, auto sales fell 15.2% year-on-year, including new-energy vehicle sales down 14.2% year-on-year. Worth noting, steel export conditions have turned. In January and February, China’s cumulative steel exports were 15.591 million tons, down 8.1% year-on-year, sharply lower than the full-year export growth rate of 15.3% in 2025.

In mid-to-late March, steel inventories reached a seasonal turning point. However, inventory de-stocking is more a seasonal pattern rather than a substantive improvement in demand. From the year-on-year basis using the lunar calendar, rebar social inventories were 6.4275 million tons, up 1.189 million tons year-on-year, still at a relatively high level. This high-inventory structure will exert some downward pressure on prices. With the arrival of the traditional peak consumption season in April, inventories are expected to continue falling, but the speed of de-stocking will be a key indicator for judging the strength of demand.

In March, raw material prices overall ran slightly strong. For iron ore, port inventories of 47 were 176.67 million tons, down 14.7 million tons month-to-month. Although it remains at a high level, marginal improvement has been seen. For double coke, some coking plants have initiated the first round of price increases for coke. Wet-quenched coke prices rose by 50 yuan/ton, and dry-quenched coke prices rose by 55 yuan/ton. It is expected that implementation is only a matter of time. Spot sentiment for coking coal has been hot. The Iran–US ceasefire agreement is still being negotiated, and the conflict is expected to continue, which will further support coking coal and coke prices.

Looking ahead to April steel market conditions, we expect volatility with a slightly stronger bias but limited upside. Bullish factors: 1) Strong cost support: Ongoing Middle East geopolitical conflict keeps energy prices at high levels, sea freight costs increase, and prices of coking coal and iron ore are unlikely to fall significantly, providing rigid support to steel prices. 2) Supply release limited: Current steel mills’ profitability is insufficient to exceed 50%; short-process mills are generally operating at a loss, constraining a major expansion of supply. 3) Seasonal demand recovery: April is a traditional peak consumption season. Terminal visible demand is expected to continue recovering, inventories continue to de-stock, providing a demand base for price increases. 4) Price adjustments by leading enterprises: Baoshan, Ansteel, and other leading enterprises raised ex-works prices by 200 yuan/ton for April, boosting market confidence. Bearish factors: 1) Weak real estate demand: In January and February, the year-on-year decline in newly started housing construction area was 23.1%, and the construction area declined 11.7% year-on-year. Real estate steel demand continues to shrink and is difficult to reverse. 2) Inventory pressure persists: Even though the de-stocking cycle has entered, inventories in some regions are still at high levels, with substantial digestion pressure. 3) Macroeconomic uncertainty: External risks such as the Iran–US war, Federal Reserve policy, and volatility in bulk commodities continue to intensify, which may trigger sharp fluctuations in market sentiment.

Based on a comprehensive assessment of both bullish and bearish factors, we expect the April steel market to show the characteristics of “volatile and slightly stronger, with limited room.” The core logic is that rigid cost support limits downside for steel prices, but lack of strong demand recovery constrains the upside. Overseas macro risks may increase market volatility. We suggest market participants remain cautious. Traders should seize the timing when prices rise to actively ship goods and reduce inventory levels, avoiding blindly chasing price increases and stockpiling. They may use futures-spot hedging to lock in profits; downstream steel-using enterprises are advised to focus on procurement based on actual needs and selectively replenish inventories on pullbacks. For the rebar 2605 contract, focus on the 3100–3200 yuan/ton trading range. For the hot coil 2605 contract, focus on the 3250–3350 yuan/ton range. In the short term, take a “volatile and slightly stronger” view, but it is not advisable to chase rallies or sell aggressively.

Key Risk Points:

Geopolitical conflict beyond expectations: If the Iran–US war continues to escalate or expand, it will further push up energy prices and sea freight costs, and may also affect China’s steel exports.

Federal Reserve policy beyond expectations: If U.S. inflation remains above expectations, the Federal Reserve may keep high interest rates for a longer time, and even raise rates further, suppressing global demand.

Domestic demand below expectations: If infrastructure funding is not in place as expected or real estate sales remain sluggish, the pace of demand recovery may be weaker than expected.

Supply release beyond expectations: If steel mills’ profitability improves and they rapidly expand production, it could break the weak supply-demand balance.

Analyst: Chu Xinli

Futures trading advisory practice information: Z0018419

Research Assistant: Yang Chenyu Hu

Futures practice information: F03135237

Research Assistant: Liu Xinghua

Futures practice information: F03144602

National unified customer service hotline: 400-8877-780

Website: www.cfc108.com

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