Dynamic balance between pig iron cost and demand

As a fundamental raw material for the steel industry, pig iron price fluctuations have always been a major concern for the entire industry chain. Entering the fourth quarter of 2025, the pig iron market exhibited a distinct characteristic of “rising costs supporting growth while demand drags down.” Steelmaking prices in Shandong fell by 1.81% within the month, and ductile iron prices in Hebei fell by more than 2%. Under the dual pressure of rising raw material prices and weak end-user demand, the industry is undergoing a new round of adjustment.

The rigid increase in costs has become the most prominent contradiction in the market. In November, the coking coal market completed two rounds of price increases, with a cumulative increase of 100-110 yuan/ton, directly pushing up pig iron production costs—the cost of pig iron for steelmaking in Hebei increased by 55 yuan/ton compared to the previous month, and the cost of cast iron increased by 57 yuan/ton. Although iron ore prices are fluctuating, the structural shortage of high-grade Australian fines still provides some support for costs, putting pig iron producers under the inverted pressure of “rising raw material prices and falling finished product prices.” This inverse fluctuation between costs and selling prices has plunged most ironworks into a profit-shrinking predicament, and some small and medium-sized enterprises have begun planning shutdowns for maintenance to mitigate risks. The continued sluggish demand has become the key factor weighing on prices. The foundry industry, a major downstream sector for pig iron, has been affected by the US-China trade war, with export orders for castings hampered and domestic operating rates remaining low. More seriously, persistently low scrap steel prices have squeezed the market space for pig iron due to their cost-effectiveness advantage, increasing downstream enterprises’ willingness to switch to scrap steel as a substitute, further suppressing pig iron procurement demand. Data shows that in November, the average daily pig iron output of 247 sample steel mills decreased by 6,000 tons month-on-month. Although supply has slightly contracted, previously accumulated inventories remain high. As of the end of June, ductile iron inventory had increased by 36.36% compared to the beginning of the year, forcing iron mills to passively lower prices to reduce inventory.

Looking ahead to the end of this year and the beginning of 2026, the supply-demand imbalance is unlikely to fundamentally change. On the supply side, maintenance plans at individual iron plants are unlikely to reverse overall supply pressure; on the demand side, it is currently the traditional off-season, and orders in the foundry industry are unlikely to see significant release, with the scrap steel substitution effect continuing. On the cost side, the weakening trend of coking coal and the fluctuating iron ore prices will reduce the cost support for pig iron.

For pig iron enterprises, the current focus should be on both cost control and market expansion: reducing energy consumption by optimizing blast furnace parameters and accurately matching production and sales through digital systems; simultaneously, seizing the increased demand from new energy vehicles, high-end equipment, and other fields, and developing special pig iron products to increase added value. During the industry adjustment period, only by strengthening cost defenses and accurately identifying demand anchors can enterprises gain the upper hand in the game between cost and demand and prepare for a market recovery.