Iron Output Drops in January‑July, Putting Pressure on Iron Ore Prices

Data released by the National Bureau of Statistics show that in July 2026, China’s pig iron output stood at 68.35 million tonnes, a year‑on‑year decline of 4.5 %; crude steel output reached 76.93 million tonnes, down 3.6 % year‑on‑year; steel product output hit 116.46 million tonnes, dropping 4.1 % compared with the same period last year.

For January‑July 2026, pig iron output totalled 495.77 million tonnes, falling 3.0 % year‑on‑year; crude steel output amounted to 577.04 million tonnes, a year‑on‑year decrease of 3.1 %; steel product output came to 836.16 million tonnes, slipping 1.2 % year‑on‑year.

Pig Iron Market Halts Decline and Rises in Mid‑August: Will the Upward Momentum Last?

In early‑to‑mid August, the pig iron market first fell then climbed. Prices remained under pressure due to previously weak demand and inventory burdens. Buoyed by improved sentiment in futures markets alongside stabilising production costs, market prices began to pick up.

Looking ahead, operating rates stay at low levels, and it will take time for inventories to drop materially. Substantial demand growth is unlikely, yet cost‑side support is set to strengthen. The pig iron market may trend steadily higher in the second half of August.

From the supply side, pig iron supply saw marginal contraction in early‑to‑mid August. During the prior price slump, some ironworks shut down blast furnaces and a handful of producers switched production lines, leading to a gradual fall in blast‑furnace operating rates. As of August 14, the blast‑furnace operating rate stood at 57.75 %, down 7.11 percentage points from the start of the month. The steady fall in pig iron output has underpinned prices to some extent. Nevertheless, historically high accumulated inventories have not been quickly absorbed despite lower operating rates. Inventory draw‑down has been slow, stockpiles keep building and destocking remains sluggish, leaving overall supply ample. High inventories remain the key factor capping the scope of the current price rebound.

Demand Side: Partial Demand Release Brings Slight Improvement

The traditional off‑season effect for the industry is prominent. Downstream end‑users operate at low capacity and only purchase to meet rigid consumption needs with a “buy‑as‑you‑use” strategy. Early‑month trading consisted mostly of scattered small‑lot transactions. Price‑squeezing behaviour among buyers was widespread amid fierce sales competition and thin trading volumes. Weak demand directly drove successive falls in pig iron prices. Once prices fell to relatively low levels in mid‑August and futures rebounded, traders started restocking driven by the mentality of “buy on rises rather than falls”. Trading activity picked up noticeably.

Cost Side: Raw‑Material Prices Stabilise, Cost Bottom Emerges

The third round of coke price cuts previously anticipated by the market was fully implemented, continuously weakening cost support for pig iron. Meanwhile, iron ore lacked positive catalysts, and negative factors on the raw‑material side weighed further on pig iron prices. With the third round of coke price cuts completed, past negative cost pressures have largely been priced out. Coke prices face upward potential going forward. Together with steadily rising iron ore prices, raw‑material costs for pig iron have stopped falling and a cost bottom has formed, creating conditions for spot‑price stabilisation and recovery.