Steel Prices Edge Higher as Chinese Mills Announce Production Cuts

Supply-Side Adjustment

Faced with poor profitability—driven by high raw material costs and falling product prices—high-cost Chinese steel mills have announced deeper cuts to their output. This supply-side adjustment is necessary to reduce the inventory surplus and is providing the primary support for prices currently.

Export Market Concerns

The export market, which has absorbed much of the surplus Chinese steel in 2025, is becoming increasingly risky due to new protective tariffs imposed by trading partners like Mexico. These actions threaten to redirect surplus steel back into the domestic Chinese market, which could severely pressure prices if not offset by deep production cuts.

Infrastructure Expectations

Market participants are looking for concrete signs of government-led infrastructure spending. While stimulus pledges have been made, real-world construction acceleration is needed to generate the robust demand required to clear the current inventory overhang and drive a sustainable price rally.