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China’s Steel Market Outlook: Positive Sentiment Amidst Compressed Production and Declining Exports

In recent weeks, China’s steel industry has shown positive signals despite a slight reduction in production. Key developments include CISA mills’ daily crude steel output down 0.1% in late Feb, stocks also down and China reduced steel exports by 8.1% y/y in January-February, indicating decreased supply pressures and reinforcing potential market stability.

Satellite data highlights a consistent decline in activity at major steel plants. The monthly averages show that the mean steelplant activity in China dropped from 41% in February to 27% in March 2026, coinciding with the reported reduction in output. Jianglong Acheng Iron & Steel Co., Ltd.’s activity decreased from 46% to 43%, while Wulanhot Steel Co., Ltd. saw activity decrease from 59% to 58%. Baosteel Group Xinjiang Bayi Iron & Steel Co., Ltd. remained largely stable with a marginal rise to 67%.

Jianglong’s operations, primarily producing hot rolled and coated steel products, align with the inventory decrease reported by CISA, suggesting streamlined production efforts. Activity at Wulanhot has been stable despite the overall industry decline, likely due to focused production aimed at supporting regional infrastructure demands. Baosteel, maintaining robust activity levels, suggests strong order backlogs may also coincide with increased domestic consumption despite reduced exports.

Overall, procurement professionals should prepare for potential supply tightness given the strained production levels and diminishing exports confirmed by the CISA’s report. Specific recommendations include:
– Engaging with Jianglong Acheng Iron & Steel Co., Ltd. and Baosteel Group for securing long-term contracts to ensure supply stability despite market fluctuations.
– Monitoring activity levels at Wulanhot Steel Co., Ltd. for responsiveness to infrastructure demands, particularly in Inner Mongolia.

Careful consideration of the evolving landscape combined with the insights from CISA will enable buyers to position themselves advantageously in a positive market sentiment environment.