Recent intensified safety inspections have led to large-scale shutdowns and self-inspections at mines in Shanxi, a major coal-producing region. According to a survey by "My Steel", among 523 coking coal sample mines surveyed this week, daily raw coal production decreased by 326,000 tons week-on-week, with Shanxi alone seeing a reduction of 306,000 tons. This has resulted in a significant contraction in coking coal supply. Prices from mine mouths, auctions, and coal washing plant traders have generally risen by 50 to 150 yuan per ton, with smooth market transactions and almost no failed auctions. This situation is prompting coking enterprises to consider a fifth round of price increases.
Domestically, the coking market completed two consecutive price hikes in April, increasing by 100 yuan/ton and 110 yuan/ton respectively. At the end of April, coking enterprises raised prices by another 50-55 yuan/ton. A fourth round of increases was completed in mid-May. Coking coal futures have now risen to approximately 1,900 yuan per ton, compared to less than 1,400 yuan/ton in February.
Typically, producing one ton of steel requires 0.3 to 0.35 tons of coke. Influenced by rising coke costs, domestic ordinary steel prices have been increasing since March, reaching 3,298 yuan/ton in mid-May before falling back to 3,160 yuan/ton on May 29. Previously, domestic steel prices were at a four-year low, with rebar futures around 3,100 yuan/ton.
An industry analyst noted that the recent rise in steel prices is mainly due to increased costs, self-disciplined production cuts on the supply side, and demand release driven by policy implementation. However, she also stated that the possibility of a significant upward shift in the annual steel price center this year is low, with the overall trend expected to be "low-level fluctuations with a slight upward bias."
A report from the China Iron and Steel Association indicated that in the first quarter, the Chinese steel industry overall exhibited characteristics of "supply exceeding demand, declining exports, low and stable steel prices, and rising costs." Although industry self-discipline in production control led to a year-on-year decrease in output, the high operating prices of raw materials (especially iron ore) against the backdrop of low and stable steel prices created a significant "scissors gap," severely compressing corporate profit margins. The main business profit of key steel enterprises was only 1.03 billion yuan, a sharp decrease of 85.6% year-on-year, with an overall industry sales profit margin of merely 1.46%.
On May 18, the Ministry of Industry and Information Technology officially issued the revised "Notice on Measures for Capacity Replacement in the Steel Industry," restarting capacity index trading and tightening the exit of excess capacity.
Domestic steel companies are facing the dilemma of rising raw material prices that are difficult to pass on to downstream sectors. Affected by geopolitical conflicts, prices of coal and related products are rising significantly. As of May 28, the price of thermal coal at Qinhuangdao Port was about 848 yuan/ton, compared to about 730 yuan/ton in February. Multiple rounds of coke price increases have raised steel production costs by over 60 yuan/ton.
Influenced by shipping costs, the price of iron ore, a major raw material for steel production, is also rising. According to calculations, as of the end of May, freight rates for Capesize vessels from Brazil to China rose from $23.4/ton to $30.69/ton, an increase of 31.15%, reaching the highest level in nearly a year. Freight rates from Australia to China increased from $9.98/ton to $11.03/ton, also hitting a near one-year high.
The analyst mentioned that steel companies are mainly responding to cost pressures in three ways: shifting from pursuing output to "production based on sales and efficiency," optimizing the proportion of coal and ore blends to reduce smelting costs per ton of steel; actively using futures and options tools for iron ore and coke to hedge, lock in远期运费, and offset现货海运费 risks; accelerating mergers and reorganizations to enhance bargaining power with upstream suppliers, and proactively conducting maintenance shutdowns or reducing production to alleviate supply-demand矛盾.
She stated that recent consecutive coke price increases and rising iron ore shipping costs provide support for steel prices. However, as the real estate industry is still in a bottoming-out recovery phase, overall domestic demand lacks sufficient elasticity. The fundamental矛盾 of domestic steel oversupply has not been彻底 resolved. The real estate market was once a major consumer of domestic steel, with construction materials using over 300 million tons of steel annually, and was the absolute main application area for products like wire rod and rebar. "With the decline in real estate construction starts, steel companies producing rebar and wire rod are facing severe pressure for capacity淘汰 and持续降低 profits," she said.
On the other hand, current steel demand is shifting towards high-end manufacturing and new infrastructure construction, especially driven by orders from the shipbuilding industry and the新能源产业爆发, which is拉动 demand for high-end制造钢. Demand for high-strength automotive steel, ship plate steel, and wind power steel remains high, with significant premiums for品种钢.
Shanxi Taigang Stainless Steel Co.,Ltd., with an annual steel capacity of about 15 million tons, of which over 6 million tons is stainless steel, reported revenue of approximately 90.4 billion yuan in 2025, with a net loss of about 59 million yuan. The company's general manager stated at a recent performance briefing that the steel industry has entered a stage of comprehensive减量发展 and structural adjustment. For all enterprises in the industry, there is a need to return to high efficiency and high效益. The chairman added that during the "十五五" period, the company will no longer单纯 pursue规模扩大, but will focus on quality improvement, applying steel to new industries such as aerospace.
Due to large domestic steel产能 and low prices, exports were once seen as an important way to address domestic steel overcapacity. According to data, China's exports of most steel types have surged since 2022, with annual steel exports currently around 100 million tons.
The analyst said India and Southeast Asian countries are currently the regions with the fastest growth in global steel demand, with India's steel demand growth rate in the first quarter of this year around 6%-7%. However, in recent years, India and Southeast Asia have added大量高炉产能. With cost and geographical advantages, these local capacities will have a direct替代效应 and competitive pressure on China's exports of low-end steel. According to forecasts, after peaking in 2025, China's steel exports are expected to decline year by year in the future.
She stated that low-value-added, high-tonnage steel is losing competitiveness due to increased compliance and shipping costs. Domestic steel companies are actively reducing exports of low-end steel and转向 exporting special steel and high-end plates.
Developed markets like the EU face compliance cost pressures. In April, the EU officially announced the CBAM (Carbon Border Adjustment Mechanism) certificate price, approximately 75 euros per ton of CO2 equivalent. A green steel首席分析师 noted that goods covered by CBAM account for only 1.8% of China's total exports to the EU but are concentrated in industries like steel and aluminum. The CBAM mechanism allows importers to deduct碳成本 already paid in the country of origin, but due to China's low carbon price, the steel industry can only offset 8% of the CBAM burden. According to his calculations, the current CBAM cost for Chinese steel companies using actual emission data is about $160/ton. Compared to EU competitors, Chinese steel mills still have a cost advantage. Some high-profit products can still be profitable after deducting freight costs. However, if default values are used, the steel carbon cost could reach about $277/ton.
He stated that steel companies are currently addressing the impact of the EU CBAM through various途径. First, striving to provide third-party verified actual emission data to avoid default value penalties. Second, promoting green steel production and using renewable energy like green electricity to reduce carbon emissions. Finally, shifting some exports from the EU market to non-CBAM markets like ASEAN, the Middle East, and Africa to reduce direct exposure. For example, companies like Baowu and HBIS are accelerating overseas investments in low-carbon metallurgy projects in the Middle East and Central Asia, utilizing local natural gas and renewable energy conditions to produce low-carbon steel.
He详细分析了 factors hindering domestic steel companies from low-carbon transformation: transforming to hydrogen-based direct reduced iron plus electric arc furnaces incurs additional production costs of up to $100/ton, and a large amount of blast furnace equipment was built between 2000-2015 with high residual asset value; if transforming to scrap steel plus electric arc furnace路线, scrap steel supply is very limited domestically, and due to impurity issues, the全废钢流程 can currently only be used to produce low-end products like rebar.
A technology group is providing源网荷储/green electricity direct connection solutions to clients in steel, electrolytic aluminum, and other industries this year. The company's vice president and chief sustainability officer stated that since CBAM does not recognize China's green certificates and has doubts about the recognition of China's green electricity交易, the green electricity direct connection model will be the首选 for energy-intensive export enterprises like steel. From an investment return perspective, it not only meets CBAM requirements for green electricity, reducing export carbon tariffs, but also helps companies lower electricity costs. Currently, the company is promoting green electricity direct connection in the steel industry in Shandong, Heilongjiang, Hebei, and other places.
The analyst said that constrained by the high costs of green hydrogen and clean power supply, the immature scrap steel resource recycling system, and the low willingness of most domestic downstream终端 to pay a premium for "green steel," in a cycle where steel companies are generally亏损, enterprises lack sufficient profit and external incentives to support low-carbon transformation. The green steel analyst stated: "Policy-mandated low-carbon transformation at this stage significantly benefits large, well-funded leading enterprises and will accelerate industry consolidation."
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