In March 2026, China’s steel market faced a difficult balance between rising production costs and weak demand. Geopolitical tensions disrupted shipping through the Strait of Hormuz, and the ongoing Russia‑Ukraine conflict pushed up global energy prices. These factors increased the costs of iron ore, coking coal, and ocean freight, giving strong cost support to steel production. 

At the same time, domestic demand remained much weaker than expected. New real‑estate construction stayed sluggish, and infrastructure projects returned to work more slowly than planned. Because of this, actual steel consumption did not improve, and high inventory levels limited the ability of spot prices to rise. As a result, futures and spot markets showed different price trends.

On the supply side, long‑term pressure on profitability led steel companies to keep production low, causing a clear year‑on‑year drop in daily output. In addition, global trade protection measures and the EU’s CBAM policy added more uncertainty to China’s steel exports.

Overall, the market is pulled in two directions: external cost inflation versus weak internal demand. This makes it difficult for steel prices to move out of a volatile range in the short term. Future performance will depend on how geopolitical risks develop and how fast domestic demand can recover.