China: Steel inventories increase 11% in mid-May'26 on weak demand

• Weak demand and subdued trading weigh on market
  
  
• Crude steel production declines on cautious mill operations
  
  

The China Iron and Steel Association (CISA) reported that the total steel inventories at key CISA mills stood at around 18.77 million tonnes (mnt) in mid-May (11-20 May), an increase of 1.89 mnt or 11.2% compared with 16.88 mnt in early-May.

Compared with the previous month, inventory level inched up by 140,000 tonnes (t) or 0.8% m-o-m from 18.63 mnt in mid-April.

Furthermore, compared with the same period last year, inventories increased by 2.42 mnt, or 14.8% y-o-y, from 16.35 mnt recorded in mid-May 2025.

With market activity weighed down by weak demand and subdued trading, inventory levels increased during the period as slower offtake led to the accumulation of unsold material.

Production volumes

The average daily crude steel production of CISA-affiliated mills srood at around 2.096 mnt in mid-May, marking a drop of 0.7% from 2.11 mnt in early-May. Moreover, the same dropped by 4.7% y-o-y from 2.20 mnt in mid-May 2025.

Average daily finished steel output stood at around 2.007 mnt in mid-May, increasing by 3.3% from 1.942 mnt in early-May. However, the same dropped by 5.5% y-o-y from the same period last year.

Average daily pig iron output stood at around 1.879 mnt in mid-May, down by 0.9% from 1.89 mnt in early-May. Furthermore, on yearly basis, the output dropped by 5.2% y-o-y.

Outlook

After the Shanxi province coal mine accident, higher coking coal and coke futures may led to increase steel prices in the near term. However, the market remains largely sentiment and cost-driven, while narrowing steel mill margins continue to pressure pricing and downstream demand.