Supply and Demand Analysis of Hot-Rolled Coil: Supply Keeps Expanding While Demand Tightens

Supply: Output Rises in the first half, up 3.06% year on year

Hot-Rolled Coil (HRC) monthly output increased year on year in most months of the first half of 2026. Only January saw a slight drop.

In H1 2026, total HRC output reached 171.5939 million tonnes. It rose 3.06% compared with the same period in 2025. In May, monthly output hit 30.1285 million tonnes. This was the first time the figure exceeded 30 million tonnes, setting a new record.

HRC output grew in the first half for two main reasons. New rolling lines came into service. Besides, the price gap between HRC and rebar widened, pushing steel mills to adjust production plans.

China continued to expand HRC production capacity in 2026. Two new rolling lines started operation this year, and one rolling line finished equipment upgrade. These lifted total capacity.

By June 2026, domestic operational HRC capacity reached 380.06 million tonnes. The number rose by 8.1 million tonnes or 2.18% from 2025. New capacity and stable operation directly lifted HRC output.

The price spread between HRC and rebar kept growing in 2026. It stayed above 250 yuan per tonne. HRC brought better marginal profits than rebar. Many steel mills switched from rebar production to HRC. This production shift further lifted HRC output.

Demand: End industries show mixed performance. Demand remains resilient with limited growth space

Several key downstream industries cut HRC consumption, including export, real estate and automobile sectors.

Customs data shows China exported 6.6579 million tonnes of HRC from January to May. The figure fell 33% from 9.7843 million tonnes in the same period of 2025. Export declines came from tougher overseas market conditions, higher trade barriers and export licence rules.

The real estate sector stayed weak in 2026. New construction area continued to fall, dragging HRC demand lower.

Vehicle output and sales hit record highs in 2025. In 2026, consumption subsidies faded. Consumer purchasing power weakened. Auto production and sales dropped year on year. Weak performance in real estate and auto industries put pressure on HRC demand.

Some industries supported demand growth, such as cold-rolled coil (CRC), machinery, shipbuilding and container manufacturing.

CRC output edged up slightly in H1 2026. Total output stood at 73.8604 million tonnes, up 0.19% year on year. Growth stayed slow. The auto market, CRC’s major downstream sector, remained sluggish and failed to lift CRC consumption.

Machinery exports grew steadily over the past three years. Exports now account for nearly half of total machinery sales. In 2026, machinery production and sales maintained positive growth. Improved domestic demand and rising exports both boosted the industry.

Shipyards hold enough orders to keep production running until 2030. This lifted demand for containers. Shipbuilding and container manufacturing use large volumes of HRC. They become important sources of HRC demand.

To sum up, downstream industries delivered mixed results in the first half. Weak demand from real estate, exports and auto sectors offset demand gains from growing industries. Overall HRC demand still holds resilience, but there is limited room for further growth.