“Peak Season” Unlikely – What Is the Real Steel Demand Now?

In spring 2026, steel demand is recovering seasonally but remains weaker than in previous years. The release of end-user demand is narrowing, downstream performance is diverging, and exports have fallen sharply, heightening market concerns.

I. Ample Liquidity, Front-Loaded Special Bonds  

M1 growth is picking up, and liquidity remains abundant. Social financing increased by RMB 9.6 trillion in Jan–Feb, up RMB 316.2 billion YoY. Special bond issuance has been brought forward, with about RMB 1.16 trillion newly issued in Q1, mainly for municipal infrastructure, industrial parks, and water conservancy. However, the time from fund allocation to project implementation has lengthened by 2–4 weeks, with effects expected gradually from March to May.

II. Divergent Downstream Sectors  

– Real Estate: Second-hand home transactions rebounded in core cities (Shanghai saw 31,215 online contracts in March, a five-year high), but national new construction starts fell sharply (residential starts down 23.3%). Real estate remains a drag.

– Automotive: Production and sales fell 9.5% and 8.8% YoY in Jan–Feb due to policy-driven demand front-loading. Exports are strong – 1.26 million units in Q1, becoming the world’s largest exporter.

– Construction Machinery: Domestic sales declined, but exports grew strongly. A recovery is expected in Q2.

– Shipbuilding: Orders continue to surge; Chinese shipbuilders held 70% market share in Q1, with deliveries scheduled to 2030.

– PV: New installed capacity in Jan–Feb was 32.48 GW, down 17.7% YoY, and full-year growth may slow.

III. Steel Exports Under Pressure  

Jan–Feb exports were 15.59 million tons, down 8.1% YoY, due to a high base, new policies, tariffs, and geopolitical conflicts. Short-term pressure persists.

VI. Demand Likely to Peak Soon  

Apparent consumption of the five major steel products has recovered steadily but growth narrowed in late March. Demand is expected to peak in mid-to-late April, followed by steady, modest procurement – no sustained surge.

V. Conclusion  

A true “peak season” for steel demand is unlikely. The overall demand level is close to that of last year. Ample liquidity provides bottom support, but downstream sectors are clearly diverging; real estate is still bottoming out, and exports face headwinds. Future focus should be on the pace of special bond implementation and marginal changes in the real estate sector.