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Steel Price Trend Forecast and Procurement Strategies for the Near Term
The global steel market has entered a phase of cautious adjustment amid intertwined factors of supply, demand, and cost fluctuations. As we approach the end of 2025, understanding the near-term price trajectory and formulating scientific procurement strategies have become critical for industries relying on steel, such as construction, manufacturing, and infrastructure. This article provides a professional analysis of steel price trends and actionable procurement recommendations based on the latest market dynamics.
1. Current Market Dynamics and Price Trend Forecast
1.1 Weakening Demand as a Key Constraining Factor
The most prominent challenge facing the steel market is the持续 contraction in terminal demand, particularly from the real estate sector—the largest downstream consumer of steel. According to data from the National Bureau of Statistics, China's real estate development investment dropped by 13.9% year-on-year in the first nine months of 2025, with housing starts plummeting by 18.9% during the same period. This downward trend has directly transmitted to steel consumption, leading to reduced orders for long products such as rebar and wire rod.
Meanwhile, the manufacturing sector, though showing marginal recovery, still lacks strong momentum to drive steel demand growth. The combination of these factors has resulted in a gradual decline in steel mill operating rates, with China's daily molten iron output falling below 240,000 tons in late October for the first time in months—a clear sign of weakened production enthusiasm amid sluggish demand.
1.2 Supply-Side Relief Easing Cost Pressures
On the cost front, the iron ore market— a major cost driver for steel production—is shifting from tightness to looseness. After months of strong performance, iron ore prices have started to correct since mid-October, as supply-side利好 (positive factors) fade. China's iron ore imports in September 2025 reached 116.326 million tons, a year-on-year increase of 11.9%, narrowing the cumulative decline for the first nine months to just 0.1%. Domestic ore production has also seen a shrinking year-on-year decline, indicating that total iron ore supply will likely turn to year-on-year growth in the fourth quarter.
This supply recovery comes against a backdrop of high valuation in the iron ore market. Currently, iron ore futures prices are around 780 yuan/ton, at the 68th percentile of the past decade, while steel prices (e.g., rebar futures at 3,100 yuan/ton) are only at the 22nd percentile. The significant profit imbalance between the iron ore and steel sectors is unsustainable, suggesting further downside potential for iron ore prices and thus reduced cost support for steel.
1.3 Inventory Buildup Adding Downward Pressure
Inventory levels have emerged as another bearish signal. Data from the China Iron and Steel Association (CISA) shows that steel inventories at key statistical steel enterprises reached 15.88 million tons in the first ten days of October 2025, an 8.2% increase from the previous ten days and a 28.4% rise from the beginning of the year. The continuous inventory buildup reflects the mismatch between supply and demand, putting additional pressure on steel prices in the short term.
1.4 Integrated Forecast: Cautiously Bearish in the Short Term
综合 (Synthesizing) the above factors, the near-term steel price trend is expected to be cautiously bearish. In the fourth quarter of 2025, steel prices may face further downward pressure due to weak demand, easing cost support, and high inventory levels. However, the magnitude of the decline may be limited by occasional production cuts (e.g., extended environmental restrictions in Tangshan, Hebei) and potential policy stimulus for the real estate sector. Looking into early 2026, prices may stabilize or stage a modest rebound if demand picks up with the traditional peak season and policy effects materialize.
2. Practical Procurement Strategies
2.1 Adopt a "Small-Batch, Frequent-Purchase" Approach
Given the expected price decline, enterprises should avoid large-scale bulk purchases to prevent inventory depreciation risks. Instead, implement a "small-batch, frequent-purchase" strategy based on production needs. This approach helps reduce capital occupation and allows flexibility to adjust procurement volumes according to real-time price fluctuations. For example, set a weekly procurement cycle and adjust the quantity based on the latest steel mill quotations and market sentiment.
2.2 Lock in Costs Through Long-Term Contracts with Flexibility
While spot purchases offer flexibility, long-term contracts with steel mills can provide cost stability. Negotiate contracts with flexible terms, such as price adjustment clauses linked to benchmark indices (e.g., the Shanghai Steel Federation rebar price index). This way, enterprises can benefit from price declines while avoiding supply disruptions. It is also advisable to include minimum order quantity (MOQ) flexibility to adapt to changing production schedules.
2.3 Diversify Suppliers and Explore Alternative Materials
Diversifying the supplier base reduces reliance on a single source and enhances bargaining power. Engage with both large integrated steel mills and regional secondary mills to compare prices and services. Additionally, for non-critical applications, consider alternative materials such as aluminum alloys or high-strength plastics to reduce steel consumption. This not only lowers procurement costs but also mitigates risks associated with steel market volatility.
2.4 Strengthen Market Monitoring and Risk Management
Establish a dedicated market monitoring mechanism to track key indicators such as steel prices, inventory levels, iron ore costs, and policy developments. Leverage industry platforms (e.g., Mysteel, CISA) and professional consulting services to obtain timely and accurate market information. Based on this data, develop a risk early-warning system to trigger procurement adjustments when critical thresholds are reached (e.g., a 5% price drop or a 10% inventory increase).
2.5 Seize Opportunities for Strategic Stockpiling
Once steel prices stabilize or show clear signs of bottoming out (e.g., consistent inventory reduction for two consecutive weeks, strong policy stimulus), enterprises can consider moderate strategic stockpiling for the upcoming peak demand season. Focus on high-demand products with stable quality to ensure supply security and gain cost advantages when prices rebound.
3. Conclusion
The near-term steel market is characterized by weak demand and easing cost pressures, leading to a cautiously bearish price outlook. Enterprises need to adapt to this environment by adopting flexible procurement strategies, strengthening supplier management, and enhancing market risk awareness. By combining short-term flexibility with long-term planning, enterprises can navigate the market volatility effectively, control procurement costs, and ensure stable production operations. As the market evolves, continuous monitoring and timely adjustment of strategies will remain key to success.