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Positive Steel Market Sentiment in China Amid Declining Automotive Sales

China’s steel industry is witnessing a promising outlook despite a turbulent automotive sector, as highlighted by the articles “Car sales in China fell at the fastest pace in two years in January” and “CPCA: China’s passenger vehicle retail sales down 13.9% in January 2026,” which outline significant overall drops in car sales this January. This general market instability appears correlated with declining activity levels observed in several key steel plants, although some plants have shown resilience in production metrics.

Fujian Sanbao Steel Co., Ltd. experienced an uptick to 23% activity in February 2026, slightly recovering from previous lows but still lower than the earlier peaks observed in late 2025. No explicit connection can be drawn from the recent automotive market downturn to its plant performance.

In contrast, Shandong Shouguang Juneng Special Steel Co., Ltd. demonstrated stable activity at 58% in January—a notable strength amidst automotive uncertainty—suggesting a healthy demand for special steel products in other sectors. Ningbo Iron & Steel Co., Ltd. also stabilized its activity at 38%. Despite a drop in mean activity levels to 32% in February, notable resilience by some plants indicates potential recovery points or a shift in demand drivers.

The link between the steel sector’s strong outputs at select facilities and the downturn in the automotive market may not be direct; however, it points to a potential readjustment of procurement strategies as manufacturers reallocate from declining sectors.

Steel buyers should focus on sourcing from plants like Shandong Shouguang Juneng, which continues to exhibit high activity levels. Increased procurement could capitalize on competitiveness amid higher demands from other industries such as construction and energy as reflected in NINGBO’s stable product lines. Buyers should also monitor changes in regulatory frameworks and raw material supply, particularly in light of decreasing consumer demand that could eventually impact output capabilities and thus availability for procurement.