Domestic demand for steel in China continues to fall

Domestic demand for steel in China, according to market participants’ estimates, continued to fall in May and is likely to decline in June. This was reported by S&P Global.

The domestic steel market is expected to remain under pressure in the coming months, with steel mills unwilling to cut production. Export volumes are likely to remain strong until the end of 2025.

According to Platts calculations based on data from the National Bureau of Statistics, the Customs Service, and the China Iron and Steel Association (CISA), apparent domestic steel consumption in China fell by 12.3% year-on-year in May to 75.57 million tons.

Average daily consumption in China in May was 2.438 million tons, down 4.3% from April.

In January-May, apparent steel consumption fell by 3.9% y/y – to 374.81 million tons.

Some market sources report that domestic demand for steel in China, especially in the construction sector, declined further in June due to seasonal factors. There is also concern that its seasonal recovery in August-September may be weaker than usual.

This is partly due to the surge in Chinese exports in the first half of 2025 due to US tariff policy. Therefore, part of foreign demand will grow from the second half of 2025. In addition, some sources believed that US tariffs on China and other countries would begin to negatively affect exports of some steel-intensive industrial goods later this year.

However, despite the weak outlook for steel demand, China’s pig iron and steel production resumed its upward trend in June, trade sources said. This was due to strong exports in May and June, as well as falling raw material prices, which supported the profitability of steel mills.

According to the latest monthly report from CISA, Mysteel writes that the steel market in China is expected to face greater pressure in the near term as end-user demand may decline further in the summer months, which are the off-season.

The association stressed that supply remains the decisive factor for steel prices in the near term. CISA called on the country’s steel producers to rationally adjust production schedules, optimize product mix based on profitability and demand changes, and maintain self-discipline in production control.

As a reminder, Chinese steel companies reduced steel production by 6.9% in May 2025 compared to May 2024, to 86.55 million tons. Over the first five months of the year, steel production in the country decreased by 1.7% y/y to 431.63 million tons. Export activity also remains high despite global trade barriers, with growth of 8.9% y/y to 48.47 million tons in January-May, a record high for this period in the country’s history.