China: Crude steel output drops around 4% y-o-y in Jan-Feb'26

• Weak domestic demand weighs on steel production
  
  
• Elevated supply and competitive pricing boost exports
  
  

China's crude steel production stood at 160.34 million tonnes (mnt) in January-February 2026, down 3.6% y-o-y, according to the National Bureau of Statistics (NBS).

Factors affecting crude steel output:

Weak domestic demand: The year typically begins with a slower phase, as the Lunar New Year holidays interrupt factory operations and construction work, leading to reduced industrial activity and softer demand in the first two months.

Also the Real estate development investment fell by 11.1% in Jan-Feb 2026 which led the lower consumption of steel in infrastructure sector.

Decline in steel exports: Steel exports, which were a key support for crude steel production in 2025, have shown signs of moderation in early 2026. China's steel exports fell by 8.1% y-o-y to 15.59 mnt in Jan-Feb 2026. The implementation of an export licensing system from January 2026 may have weighed on shipments, introducing additional administrative and compliance requirements. These procedures likely slowed export activity during the initial phase, although the impact may ease as exporters gradually adapt to the new system.

Amid escalating global trade tensions, the formal implementation of the EU's Carbon Border Adjustment Mechanism (CBAM) is increasingly impacting Chinese steel exports, making them less competitive and posing greater challenges for access to key international markets.

Furthermore, rising trade barriers, including anti-dumping measures across key markets, are beginning to weigh on shipments, with countries such as Vietnam, Malaysia, India, South Korea, and Brazil imposing trade protectionist measures on certain Chinese steel imports to shield their domestic industries from low-priced inflows.

Outlook

China's steel production is expected to remain subdued due to lower exports and lesser demands in the domestic region and inventory level also rose. Meanwhile, participants are in wait and watch approach amid the geopolitical tensions which is the reason of rising freight and insurance costs, exporters have been encountering serious disruptions in shipments.