Domestic steel prices managed to halt their decline and find a foothold in August, according to the latest analysis from the China Iron and Steel Association (CISA). The market experienced a dip followed by a rebound, ultimately trending upward, driven by growing expectations of a seasonal pick-up in demand, easing cost pressures, and a slight alleviation of inventory burdens.

However, the anticipated "golden September" boom has yet to materialize, with domestic steel prices currently exhibiting a pattern of narrow, sideways fluctuations. The CISA data reveals that the average China Steel Price Index (CSPI) stood at 91.10 points in August, a monthly decrease of 0.65 points (0.71%) and a year-on-year drop of 3.72 points (3.92%).

Breaking down the index, the average long products index was 91.58 points, down 1.01 points (1.09%) month-on-month and 4.59 points (4.77%) year-on-year. The average flat products index reached 90.15 points, a decrease of 0.45 points (0.49%) for the month and 3.45 points (3.69%) compared to the same period last year. By the end of August 2026, the CSPI closed at 92.10 points, reflecting a monthly increase of 1.03 points (1.13%), a rise of 0.23 points (0.25%) from the start of the year, and a decline of 1.92 points (2.04%) year-on-year.

Long Products See Larger Monthly Price Gains

At the end of August, the CSPI long products index rose to 92.74 points, up 1.17 points (1.28%) from the end of July, while the flat products index increased by 0.93 points (1.03%) to 91.06 points. Compared to the same period last year, these indexes were lower by 2.51% and 1.97%, respectively. The average value for the first eight months stands at 94.00 points for long products (down 1.72% year-on-year) and 90.60 points for flat products (down 1.63% year-on-year).

Among the eight major steel varieties monitored, average prices mostly declined in August, with only galvanized sheet and medium plate remaining stable. Price decreases were led by wire rod (down 40 yuan/tonne), hot-rolled coil (down 26 yuan/tonne), and seamless tubes (down 48 yuan/tonne).

Market Movement Timeline and Regional Data

The domestic market displayed a "stable but weak" trend with narrow fluctuations in January and February, followed by an upward drift in March and April, which saw the index briefly surpass its year-ago level. May marked a peak-and-decline trajectory. Seasonal demand contraction and inventory accumulation in June exerted downward pressure, a trend that extended into July's decline. The August stabilization represented a "low-level recovery" against a backdrop of firming cost support and easing inventory pressure. September has seen a stalemate between cost support, fueled by multiple coke price hikes, and underwhelming demand, leading to narrow price fluctuations.

Across all six major regions tracked by CISA, the average price index for August declined, albeit at a slower pace than in July. The southwest region saw the largest monthly fall of 1.24%, while the northeast registered the smallest decline at 0.48%.

Fundamental Pressures Persist on the Demand Side

The underlying weakness in downstream demand sectors continues to be the primary challenge. From January to August, national fixed asset investment dropped 7.2% year-on-year, with the decline widening. Notably, infrastructure investment fell 4.0%, continuing its negative growth trajectory, while manufacturing investment decreased by 2.3%. The automobile sector, a significant consumer of flat steel, saw production and sales decline by 3.8% year-on-year over the same period. The real estate market remains a major drag, with the three core indicators—development investment (down 19.9%), new construction starts (down 24.8%), and new home sales (down 12.1%)—all registering deeper contractions.

This persistent weakness in key sectors like property and infrastructure keeps the industry's fundamental issue of "strong supply versus weak demand" firmly in focus. While leading indicators like the manufacturing PMI (49.8% in August) showed slight signs of recovery, this has not yet translated into meaningful steel demand.

Production Cuts Outpaced by Demand Decline

Data from the National Bureau of Statistics shows that crude steel production for the first eight months of 2026 totaled 651.85 million tonnes, down 3.1% year-on-year. The average daily output in August fell 3.0% month-on-month to 2.407 million tonnes. Finished steel output reached 950.75 million tonnes, a 1.7% annual decrease. This production adjustment, however, lags the demand contraction. Calculated apparent crude steel consumption for the period was 561.69 million tonnes, a year-on-year decline of 4.1%, which is one percentage point greater than the reduction in production, thus deepening the market's supply-demand imbalance.

In August, prices for raw materials showed a divergent trend, with scrap steel stable, metallurgical coke and iron ore significantly lower, and a sharp increase in injection coal prices. While the cost support for steel prices has loosened slightly, it still remains relatively robust.

International Prices Inch Higher, Divergence Across Regions

On the global stage, the CRU international steel price index average rose 1.0% month-on-month to 220.9 points in August, a significant 17.2% jump from a year ago. Regional trends diverged: North American prices strengthened (up 3.3% month-on-month to 315.8 points), buoyed by strong demand and supply constraints, particularly lifting medium plate prices; European prices also increased (up 2.5% to 239.7 points), supported by a robust manufacturing sector and tighter import supply, with coated and rolled coil prices seeing notable gains. In contrast, Asian prices fell 3.0% to 154.4 points, largely due to continued weakness in India, where monsoon rains curtailed construction activity.

Outlook: Policy Support Meets Uncertain Demand

The CISA report suggests that while the global economy is showing resilience despite energy-related shocks, significant downside risks remain, which could cap external demand. Domestically, recent statements from the State Council and the push for major project construction as part of the "15th Five-Year Plan" signal a clear increase in incremental policy support intended to accelerate the conversion of funds into tangible projects. These measures are expected to provide medium-term support for steel demand and help stabilize the real estate and infrastructure sectors.

On the supply side, enhanced carbon emission constraints under the national carbon trading market scheme are expected to intensify pressure on outdated and inefficient capacity, reinforcing expectations of supply-side contraction. However, near-term supply cues are mixed: mid-September data shows a 2.0% week-on-week increase in crude steel output from key mills, alongside a 1.7% rise in their finished steel inventories. Overall social inventory is slowly declining but remains at a high level compared to the previous two years.

Looking ahead, the report flags two critical risks. The first is that "golden September" demand may disappoint. With the real estate sector still contracting and infrastructure investment weak, there is significant uncertainty regarding the speed and scale of the promised policy-driven demand. If end-user demand fails to materialize effectively in September and October, prices supported mainly by cost factors could face downward correction.

The second risk centers on industry discipline. The sector is dealing with the dual squeeze of "high costs and weak demand." Since the "5.22" Qinyuan mine accident, coke and coking coal prices have climbed sharply, squeezing mill margins. With many steel enterprises already facing losses and not cutting production fast enough, there is a growing risk of a negative feedback loop where increased output leads to greater losses. In this context, the report calls for companies to refrain from disorderly, price-cutting competition. A recent joint notice by the National Development and Reform Commission and the State Administration for Market Regulation aims to clarify cost accounting rules to prevent "below-cost dumping" and foster a more orderly and stable market environment.