Steel products face notably stronger cost-side momentum, with prices expected to fluctuate with an upward bias in the near term. Hot-rolled coil and rebar markets are both responding to shifting supply-demand fundamentals and policy signals from the property sector.

Rebar production continued its decline this week, falling 21,900 tonnes to 1.8038 million tonnes, a year-on-year decrease of 342,700 tonnes. Social inventories dropped by 94,500 tonnes to 5.047 million tonnes, while mill inventories decreased by 63,300 tonnes to 1.7815 million tonnes. Apparent demand for rebar edged up 18,600 tonnes to 1.9616 million tonnes. The inventory drawdown has accelerated alongside a modest demand recovery, with overall supply-demand data coming in better than anticipated. According to the National Bureau of Statistics, China's crude steel output reached 76.93 million tonnes in July 2026, down 3.6% year-on-year, with cumulative output for the first seven months at 577.04 million tonnes, a 3.1% decline. Fixed asset investment for the January-July period fell 6.7% to 26.03 trillion yuan, with manufacturing investment down 1.7%, infrastructure investment down 3.6%, and real estate development investment down 19.2%. Within property investment, new construction starts dropped 24.0%, new home sales declined 11.8%, floor space under construction fell 12.7%, and building completions decreased 23.2%. The data points to a market characterized by weakness on both supply and demand sides, with demand-side metrics showing more pronounced softness. Recent easing policies for the property market in Beijing, Shanghai, and other major cities have provided some support to market sentiment, while significant gains in coking coal and coke prices have substantially strengthened the cost support for rebar. Near-term price action is expected to show a volatile but firm tone.

Hot-rolled coil production declined 45,200 tonnes to 2.9224 million tonnes this week, down 330,000 tonnes year-on-year. Social inventories eased by 2,500 tonnes to 3.6712 million tonnes, and mill inventories fell 8,100 tonnes to 706,000 tonnes. Apparent demand dropped 106,300 tonnes to 2.933 million tonnes. Production and inventory both declined with weaker apparent demand, presenting a broadly neutral picture. National Bureau of Statistics data shows July air conditioner production fell 10.1% year-on-year, while refrigerator output rose 10.6%, washing machine production gained 4.9%, and color TV output slipped 6.6%. For the January-July period, these figures stood at -1.0%, +12.1%, +3.7%, and -4.6% respectively. Passenger vehicle retail sales for August 1-16 totaled 628,000 units, down 22% year-on-year, with cumulative retail sales of 10.801 million units, a decline of 20%. Appliance production presents a mixed picture, and automobile sales remain subdued, translating to moderate demand for flat steel products. Rising coking coal prices and the implementation of the first round of coke price hikes have reinforced cost support for hot-rolled coil, with mills showing firm pricing intentions. Short-term price movements for hot-rolled coil are likely to remain volatile with a positive bias.

Iron ore prices are consolidating in a narrow range as blast furnace output edges lower. On the supply side, global shipments increased by 576,000 tonnes to 32.588 million tonnes, with Australia shipping 18.465 million tonnes and Brazil 8.622 million tonnes. Non-mainstream shipments declined by 826,000 tonnes to 5.501 million tonnes. With the impact of earlier typhoons fading, arrivals rebounded sharply, with 47-port arrivals surging by 9.646 million tonnes to 28.56 million tonnes. Global shipments rose modestly while arrivals increased substantially, re-intensifying short-term supply pressure. On the demand side, daily hot metal output at 247 surveyed steel mills slipped by 5,200 tonnes to 2.3768 million tonnes. Blast furnace operating rates rose 0.16 percentage points to 82.80%, while capacity utilization eased 0.19 percentage points to 89.25%. Four blast furnaces resumed operations and three entered maintenance during the period. Mill losses have widened, with the profitability rate among surveyed mills falling 1.3 percentage points to 32.47%. Hot metal output declined marginally, translating to softer iron ore demand. Inventory levels at 47 major ports fell by 609,000 tonnes to 173.606 million tonnes, still 29.164 million tonnes above year-ago levels. Vessels awaiting berth increased by 38 to 126. Imported ore inventories at 247 mills rose by 995,000 tonnes to 89.1077 million tonnes, remaining 1.547 million tonnes below last year's level. Port inventories continue to ease slightly, though total system inventory pressure remains considerable. Supply-side pressure is building again with shipments and arrivals at elevated levels. Demand-side support is limited as hot metal output recedes and mill profitability deteriorates, dampening incentives for production resumption. High port inventory levels continue to cap price upside. Iron ore prices are expected to maintain a narrow consolidation pattern in the near term.

Coke and coking coal markets show strengthening price momentum as coke producers face deepening losses and the first round of coke price hikes takes effect. In the coke segment, spot prices were largely stable across most regions, with Rizhao benchmark prices gaining 100 yuan per tonne. The coke futures contract for delivery in 2701 advanced 133.5 yuan per tonne. The first round of coke price increases of 50-55 yuan per tonne was accepted and took effect from midnight on August 24. Coal mine production resumption remains slow, keeping raw material coking coal prices firm. Coke producers are currently losing approximately 150 yuan per tonne on spot production, dampening operating enthusiasm, with some independent plants reducing utilization. Weekly coke output declined as independent coking plants cut daily production by 14,700 tonnes, while steel mill-affiliated coke output edged up 200 tonnes. Downstream demand showed slight improvement with rebar apparent demand up 18,600 tonnes week-on-week. Although blast furnace operating rates ticked up, capacity utilization slipped 0.19%, and hot metal output fell 5,200 tonnes per day to 2.3768 million tonnes, marginally reducing coke demand. Inventory data shows destocking of 151,800 tonnes at 230 independent coking plants, 114,200 tonnes at steel mills, while port inventories accumulated by 29,800 tonnes, resulting in a total drawdown of 287,200 tonnes. With slow coal mine resumption and shortages in certain premium coking coal grades driving prices higher, market sentiment has improved. Despite worsening losses at downstream coke plants, acceptance of the 50-55 yuan per tonne price hike by major steel mills signals upward price transmission through the supply chain. Multiple inventory segments for coking coal are drawing down, and downstream procurement enthusiasm is solid, supporting a volatile-to-firm outlook for coke prices in the near term.

In the coking coal segment, prices for various grades moved higher, with Shanxi medium-sulfur main coking coal rising 200 yuan per tonne. Imported Mongolian coal prices also advanced, with raw coal up 175 yuan per tonne and washed coal up 140 yuan per tonne. The coking coal futures contract for 2701 delivery gained 66 yuan per tonne. Supply remains constrained as mines prioritize safety and resume operations slowly. Output from 523 sampled mines increased by 15,700 tonnes for raw coal, while washed coal production rose by just 300 tonnes to 631,900 tonnes per day. Imports through China-Mongolia border crossings have eased slightly from recent highs. High raw material prices have widened losses at coke producers to around 150 yuan per tonne, reducing production enthusiasm, though the implementation of the first coke price hike may offer some margin relief. Inventory data shows raw coal stocks at sampled mines up 17,400 tonnes, washed coal inventories down 154,200 tonnes, independent coking plant inventories down 38,400 tonnes, steel mill inventories up 161,000 tonnes, and port inventories down 70,000 tonnes. Total coking coal inventories declined by 76,400 tonnes. With safety-focused production policies slowing resumption, shortages in premium coking coal grades are driving price gains. While coke producers face persistent losses, the 50-55 yuan per tonne price increase effective August 24 may partially improve their margins. Downstream steel mill profitability remains weak, limiting the scope for further coke price increases, but restocking activity has picked up, supporting a volatile-to-firm outlook for coking coal prices in the near term.

The scrap steel market shows improving valuation support as the price spread between iron and scrap widens. Scrap prices rose across most regions this week, with the national scrap price index gaining 3.2 yuan per tonne to 2,170.2 yuan per tonne. Supply tightened as daily scrap deliveries to 255 surveyed mills fell by 5,400 tonnes to 432,200 tonnes. Shredder processing plant operating rates held steady, though output and capacity utilization declined. Demand eased with scrap consumption at 255 mills down 2,900 tonnes to 461,200 tonnes daily, as short-process mills reduced consumption by 4,600 tonnes while long-process mills increased by 3,200 tonnes. Capacity utilization at 49 electric arc furnace plants declined 1.7%, and at 89 short-process mills fell 0.9%. Losses at short-process steel mills have widened, with Jiangsu valley-power operations losing approximately 150 yuan per tonne and flat-power operations losing around 270 yuan per tonne. Long-process mill scrap inventories decreased by 2,200 tonnes to 2.5 million tonnes, while short-process mill inventories increased by 18,000 tonnes to 1.22 million tonnes. Terminal demand recovered modestly with rebar apparent demand up 18,600 tonnes. Lower hot metal output and reduced mill capacity utilization have trimmed scrap demand from blast furnaces, while reduced electric arc furnace operations have also lowered scrap requirements. Rising hot metal costs have widened the iron-scrap price differential, providing valuation support for scrap. Scrap prices are expected to trend with a firm bias in the near term.

Ferroalloy markets show mixed dynamics with strengthening cost-side support but limited upward momentum. Manganese-silicon alloy prices have stabilized at lower levels with limited upside drive. Market prices for 6517 grade manganese-silicon alloy range from 5,700 to 5,950 yuan per tonne, up 50-120 yuan week-on-week. Manganese ore prices have firmed alongside the alloy price recovery, with traders showing relatively strong pricing resolve. Australian and Gabonese ore prices are around 38.5 yuan per tonne degree, and South African semi-carbonate ore at approximately 33.5 yuan per tonne degree, up 0.5-0.7 yuan per tonne degree week-on-week. Immediate production costs for manganese-silicon alloy increased by 45-90 yuan per tonne, strengthening cost support. Operating rates in Ningxia have rebounded from lows, up 8.04 percentage points to 37.8%. Weekly production increased 5.17% to 168,700 tonnes as of August 21. Demand remains weak, with daily hot metal output and rebar production both declining. Sample steel mill demand for manganese-silicon alloy fell 1.08% week-on-week to 112,800 tonnes, marking the fourth consecutive weekly decline. Inventories at 63 sampled enterprises rose slightly to 459,000 tonnes as of August 21, up 1,000 tonnes week-on-week and 303,000 tonnes above year-ago levels, setting new multi-year highs. Exchange warehouse receipts plus valid delivery notices declined by 3,786 lots week-on-week. With cost support stabilizing, production recovering in Ningxia, and persistently weak demand alongside rising inventories, fundamental drivers for sustained upward movement are insufficient. Manganese-silicon alloy prices are expected to remain range-bound in the near term.

Ferrosilicon prices lack fresh catalysts and are expected to consolidate. Prices for 72-grade ferrosilicon range from 5,560 to 5,650 yuan per tonne, up 20-50 yuan week-on-week. Coal price strength has pushed up costs, with immediate production costs in Ningxia rising approximately 70 yuan per tonne. One Inner Mongolia producer has scheduled 15 days of maintenance on a 63,000 kVA furnace, impacting output by over 2,000 tonnes. Operating rates in Inner Mongolia declined 0.26% while Ningxia increased 1.98%, with total weekly production rising 1.7% to 113,800 tonnes. Demand from sample steel mills fell 1.23% week-on-week to 18,200 tonnes, the fourth consecutive weekly decline and near five-year lows for the period. Magnesium ingot production edged up 0.99% to 3,069 tonnes daily. Inventories at 60 sampled enterprises declined by 11,200 tonnes to 76,630 tonnes as of August 21, while exchange warehouse receipts plus valid delivery notices totaled 5,090 lots, down 16,538 lots year-on-year. With cost support, modest supply growth, slightly weaker demand, declining inventories, and low warehouse receipt levels relative to last year, fundamental drivers are limited. Ferrosilicon prices are expected to remain range-bound in the near term, with attention focused on overall trends in the ferrous metals complex.