China weekly: Steel prices fall amid cautious sentiment despite rising coke costs

• • Construction sector weakness weighs on steel sentiment

• • Mine safety inspections restrict domestic coking coal supply

China’s steel prices fell in the week ended 5 June 2026, with the market facing a seasonal slowdown. On the raw materials front, prices of iron ore trended downward, though domestic coke prices increased w-o-w, while billets remained stable.

Steel prices fell despite a sharp drop in mill inventories. China Iron and Steel Association (CISA) reported that the total steel inventories at key CISA mills stood at around 15.83 million tonnes (mnt) in late-May (21-31 May), marking a 15.7% drop compared with 18.77 mnt in mid-May. However, m-o-m, inventories increased by 2.6% from 15.43 mnt in late-April. Furthermore, inventories increased by 3.5% y-o-y from 15.30 mnt in late-May 2025.

Steel prices decline amid off-season:

Domestic HRC prices decrease w-o-w: Chinese HRC prices decreased by RMB 30/t ($4/t) w-o-w to around RMB 3,220/t ($476/t) on 5 June from RMB 3,250/t ($480/t) from the previous week. However, SHFE HRC futures (October 2026 contract) edged down by RMB 19/t ($3/t) w-o-w to RMB 3,397/t ($502/t) from RMB 3,378/t ($499/t) a week earlier. Meanwhile, China’s HRC export offers stood at around $520/t FOB Rizhao, stable w-o-w.

China’s domestic HRC market remained under pressure this week as weak off-season demand continued to weigh on buying activity and transaction volumes. However, firm production costs and steady export orders offered support, limiting price movements and keeping HRC prices within a narrow range.

Rebar prices decrease w-o-w:Rebar prices in China were down by RMB 20/t ($3/t) w-o-w to around RMB 3,290/t ($486/t) as on 5 June, compared with RMB 3,310/t ($489/t) in the previous week. Moreover, SHFE rebar futures (October 2026 contract) also inched down by RMB 13/t ($2/t) w-o-w to RMB 3,160/t ($467/t) as on 5 June from RMB 3,173/t ($469/t) a week earlier.

Delayed and weak payments from construction projects continue to constrain procurement activity, resulting in subdued demand.

Notably, China’s Shagang Steel has kept its long steel prices unchanged for early-June sales. Prices of rebars, coiled rebars, and wire rods are as follows:

• • Rebars (16-25 mm):RMB 3,400/t ($503/t)

• • Coiled rebars (8-10 mm):RMB 3,530/t ($523/t)

• • Wire rods (6-10 mm): RMB 3,440/t ($509/t)

Raw material prices show mixed trends:

Iron ore spot prices fall w-o-w:Benchmark iron ore fines prices (Fe 61%) declined by $3/dmt w-o-w to $102/dmt CFR China on 5 June.

Market sentiment remained weak as elevated coke prices squeezed steel mill margins, limiting raw material procurement, while higher miner shipments and inventory sell-offs pressured prices further. The downturn was also driven by weaker steel demand expectations in China’s construction off-season and concerns over rising iron ore supply from Guinea’s Simandou project.

a) Spot pellet premium strengthens w-o-w: The spot pellet premium for Fe 65% grade pellet stood at $19.45/t CFR China, rising by $1.6/t on 3 June.

b) Spot lump premium falls w-o-w: The spot lump premium dropped by $0.006/dmtuw-o-w to $0.1765/dmtu on 5 June.

Supply tightness fuels coke rally; PHCC prices edge higher: China’s coking coal and coke markets remained firm, supported by strict mine safety inspections, slow supply recovery, and strong downstream demand. The fifth round of coke price hikes, of RMB 50-55/t ($7-8/t), was fully implemented, while low inventories and rising pig iron production continued to support the market. Market participants anticipate a sixth round of coke price increases, keeping near-term sentiment bullish.

Meanwhile, Australian premium hard coking coal (PHCC) prices increased by $2/t w-o-w to $243/t FOB as of 05 June 2026, supported by improving sentiment in the global metallurgical coal market amid tightening coking coal supply in China and expectations of higher coke prices. Reflecting the firm international market trend, BigMint’s PHCC index also edged up by $1/t to $269/t CNF Paradip, India.

Billet prices remain stable w-o-w: Chinese billet prices remained broadly stable at RMB 3,020/t ($448/t) on 5 June, compared with RMB 3,010/t ($444/t) on 29 May. Prices rose to RMB 3,030/t ($448/t) earlier in the week, supported by higher coke prices, firm iron ore values, and supply-side concerns following stricter safety inspections. However, gains were later capped by seasonally weak steel demand, rising inventories, and subdued trading activity.

Chinese billet export offers increased to $474/t FOB, supported by stronger raw material costs and expectations of higher offers from leading mills. Despite this, export activity remained limited as sellers continued to chase bids amid weak overseas demand.

Outlook:

China’s domestic steel market is expected to remain range-bound in the coming days. Weak seasonal demand may continue to weigh on prices, while changes in steel production and inventory levels will be closely monitored. Cost support and supply adjustments could help limit any significant price declines.