Chinese steel prices are poised to extend their downward trend observed in December into January, pressured mainly by the slowdown in steel demand from both domestic and overseas markets, Mysteel's chief analyst Wang Jianhua predicts in his latest monthly outlook.
As of December 31, China's national composite steel price was assessed by Mysteel at Yuan 3,440/tonne ($491.9/t) including the 13% VAT, lower by 0.4% from a month earlier.
The latest release of the Purchasing Managers' Index (PMI) for the steel industry indicated that steel business activity across the country may slow down in the coming month, Wang noted, citing statistics of the CFLP Steel Logistics Professional Committee, which showed China's steel industry PMI fell 1.7 on month to reach 46.3 in December 2025. The sub-indexes for production and new orders slid to 43.7 and 45.4, respectively, both falling below historical averages for the month.
Wang also warned that inadequate funding will constrain domestic corporate business operations. By the end of November, accounts receivable for China's sizable industrial enterprises reached Yuan 28.4 trillion, higher by a marked 5.5% on year, while the average collection period for accounts receivable was 70.4 days, 3.7 days longer compared with the same month in the previous year, according to the data released by the country's National Bureau of Statistics.
Globally, trade activity will also likely weaken this month, Wang projected. He pointed to the recent sharp decline in the Baltic Exchange's dry bulk sea freight index (BDI), a leading indicator of supply-demand fundamentals in global dry cargo markets.
By the end of December, the BDI registered 1877, falling by a substantial 26.7% from the month before. This means China's steel exports are likely to face headwinds, Wang pointed out.
Last year, robust exports served as a powerful outlet, absorbing quite a portion of domestic steel inventories, he explained. Should overseas demand weaken, steel stocks would accumulate within China, thereby exerting downward pressure on steel prices, he added.
During January-November last year, China's finished steel exports totalled 107.7 million tonnes, higher by a marked 6.7% on year, according to the data released by the country's General Administration of Customs.
By the end of last month, the total stocks of the five major carbon steel products held by steelmakers and trading houses across the 35 Chinese cities under Mysteel's monitoring stood at 12.3 million tonnes, lower by 9.8% on month, while compared with end-December 2024, the inventories remained 10.3% higher.
For this month, overall steel inventories in China are expected to decline, although trends will vary across different steel products. Specifically, stocks of rebar and wire rod are likely to continue decreasing, while those of cold-rolled coil and heavy plate are expected to grow steadily through the month. Hot-rolled coil may experience a period of destocking early in the month, followed by accumulation later on, according to Wang's estimates.
Nevertheless, steelmakers are expected to start building up feedstocks in mid-January to ensure they have adequate raw materials to maintain operations during the Chinese New Year holiday that falls in mid-February, which will provide upward momentum for the prices of feed materials such as iron ore and coke, according to Wang.
The likely strengthening of steelmaking raw materials prices may lend some cost support to steel prices, allowing the prices to rebound – albeit marginally – late this month, he predicts.
Source:Mysteel
