Steel Coil Market Outlook for Early 2026: Intensified Supply-Demand Game, Price Volatility May Become Norm
Enhanced Expectations of Supply-Side Contraction
Recently, major production areas such as Hebei and Shanxi have initiated a new round of environmental production restrictions, with some steel mills advancing blast furnace maintenance plans. It is estimated that the average daily crude steel output in February will decrease by 3%–5% month-on-month. Furthermore, as the "dual carbon" goals advance, mergers and reorganizations in the steel industry are accelerating. Leading enterprises are optimizing their product mix through capacity replacement, increasing the proportion of high-end cold-rolled and galvanized steel coils in supply, thereby alleviating competitive pressure on ordinary hot-rolled resources.
Significant Divergence in Demand Side
By sector, automotive steel demand remains relatively stable, with high production and sales growth of new energy vehicles supporting demand for high-strength steel and electrical steel. The home appliance sector, however, is dragged down by declining export orders, with some companies reducing raw material inventory cycles and purchasing on demand. The construction sector remains the biggest variable. Although special bond issuance has accelerated, the year-on-year decline in new construction starts in real estate has not narrowed, making it difficult to effectively boost steel coil demand in the short term.
Cost and Profit Pressure
On the raw material side, iron ore prices are fluctuating at high levels, while the third round of coke price cuts has been implemented, leaving limited room for immediate profit recovery at steel mills. Currently, long-process steel mills are facing losses of about 100–150 yuan per ton, while the operating rate of short-process electric arc furnace plants remains low. With cost support, the downside for steel prices is limited, but the lack of strong demand recovery means price increases lack sustained momentum. In the short term, steel coil prices are expected to fluctuate within a range.
Strengthened Linkage with International Markets
In overseas markets, steel production in Southeast Asian countries such as India and Vietnam is growing rapidly, but intensified competition for export orders due to the global economic slowdown is a concern. China’s Steel coil export quotations have weakened, with steel exports falling 8.7% month-on-month in January. Changes in Europe and the U.S. trade policies toward Chinese steel should be monitored closely, as additional anti-dumping duties could further squeeze export space.
Summary and Outlook
Overall, the steel coil market is currently influenced by a mix of positive and negative factors. Under the weak supply-demand pattern, price fluctuations are expected to narrow. Going forward, close attention should be paid to the actual pace of downstream work resumption and the effectiveness of policy implementation. If demand recovery falls short of expectations, another round of price declines cannot be ruled out. Companies are advised to flexibly adjust inventories and use futures tools to hedge risks.