China’s steel market is expected to remain range-bound with a weak bias in the second half of 2026 as supply and demand continue to diverge. Demand from the manufacturing sector, particularly new energy vehicles, shipbuilding, offshore wind, and high-end equipment, is expected to stay resilient, while the property sector will remain the main drag on construction steel consumption. 

On the supply side, stricter carbon reduction policies, crude steel output controls, and environmental production restrictions are likely to keep steel production under pressure, supporting market balance. 

Steel inventories are expected to rise during the traditional July-August off-season before declining as construction activity recovers later in the third quarter. 

Although lower iron ore prices may ease raw material costs, carbon compliance and green transition expenses are expected to support steel prices, while steelmakers' profit margins are likely to remain under pressure.