China: Crude steel output drops by nearly 5% y-o-y in Jan-Mar'26

• Weak domestic demand and rising inventories curb production
  
  
• Subdued export activity amid global headwinds weighs on output
  
  

China's crude steel production reached 247.55 million tonnes (mnt) in Jan-Mar 2026, marking a 4.6% decline y-o-y, according to data from the National Bureau of Statistics (NBS). Moreover, crude steel output in March 2026 stood at 87.04 mnt, down by 6.3% y-o-y.

Factors affecting crude steel output

Decline in steel exports: Weakening export performance emerged as a key drag on China's crude steel production in early 2026, after serving as a major support in 2025. Steel exports declined by 9.9% y-o-y to 24.717 mnt in January-March, reflecting softer external demand. The introduction of an export licensing system from 1 January added administrative and compliance hurdles, leading to short-term shipment delays and disruptions.

At the same time, external conditions remained challenging. Weak global demand, rising trade barriers, and ongoing geopolitical tensions, particularly in the Middle East, continued to disrupt trade flows. Shipping route uncertainties, higher freight rates, and elevated insurance costs reduced export viability. Together, these factors led to subdued export activity, removing a key demand cushion for Chinas steel sector and contributing to the moderation in crude steel output in the first quarter of 2026.

Weak domestic demand: Domestic steel demand in China continued to remain subdued through early 2026, adding further pressure on crude steel production. The property sector underperformed, with weak construction activity and slow project execution weighing on steel consumption. Meanwhile, muted manufacturing momentum and cautious infrastructure spending limited any meaningful demand recovery. This broad-based softness across key end-use sectors reduced domestic steel offtake, contributing to the overall decline in steel output.

Reflecting this trend, data from China's National Bureau of Statistics shows that total real estate development investment declined by 11.2% y-o-y to RMB 1.772 trillion in Jan-Mar 2026, with residential investment down 11.0% y-o-y to RMB 1.353 trillion, reinforcing the drag from the property sector on overall steel consumption.

Furthermore, steel inventories at key China Iron and Steel Association (CISA) affiliated mills rose to around 17.51 mnt in early April 2026, up by 0.96 mnt or 5.9% from 16.55 mnt in late March. The build-up in inventories highlights the imbalance between weak demand and steady supply, prompting mills to maintain cautious production levels.

Outlook

China's crude steel output is expected to remain subdued in the coming month, amid weak export activity, soft domestic consumption, and rising inventories. Ongoing geopolitical tensions continue to disrupt shipment routes, while higher freight and insurance costs are keeping export activity largely muted. With limited support from the property sector and subdued industrial demand, mills are likely to keep production in check until both domestic and global demand show meaningful signs of recovery.