Steel production in China fell by 4.6% y/y in Q1

Steel production in China fell by 4.6% y/y in the first quarter of 2026, to 247.55 million tons. This is according to data from the country’s National Bureau of Statistics, as reported by TradingView.

The downward trend intensified in March, when output fell by 6.3% year-on-year – to 87.04 million tons, marking the lowest figure for that month since 2020. Average daily production stood at 2.81 million tons, compared to 2.99 million tons a year earlier.

The key factor behind the decline was the deterioration of steelmakers’ margins. In the first quarter, raw material costs rose, particularly due to higher iron ore prices, which were supported by high freight rates amid the conflict in the Middle East and restrictions on shipments through the Strait of Hormuz. At the same time, prices for finished steel rose more slowly due to significant inventories, which weighed on profitability.

According to market estimates, in March only about 41% of China’s steelmakers were operating at a profit, compared to 53% a year earlier. This held back companies’ plans to ramp up production.

Weak demand from the construction sector remained an additional negative factor. Prices for new housing in China continued to decline, limiting steel consumption.

Exports also declined — by 12.6% y/y in March — due to both geopolitical risks and China’s introduction of export licensing in response to rising protectionism.

As a reminder, steel production in China fell below the 1 billion-ton mark in 2025, reaching its lowest level since 2018. According to data from the National Bureau of Statistics of China, the country produced 960.81 million tons of steel last year, a 4.4% decrease compared to 2024. The decline was a result of the protracted crisis in the real estate market, which significantly curtailed domestic demand for steel products.