In combination with the phenomenon that the basis of hot coil has strengthened and the spread of hot coil and coil has expanded in recent years, the production and demand of hot coil are closer to the big sample data of Steel Network, showing a year-on-year growth trend.
Since the beginning of the year, the price of hot-rolled coil has shown an upward trend with fluctuations, rising from 3,200 RMB/ton to 3,500 RMB/ton, and recently falling back to around 3,380 RMB/ton. The price spread between coil and rebar has widened, and has been fluctuating above 200 RMB/ton recently. Looking at the regions, the prices in the South China and East China regions are relatively strong, while the prices in the North China region are relatively weak, and the price spread between the East China and North China regions has further widened. The increase in the price of hot coil in the first half of the year is more of a reflection of the growth in manufacturing demand and the rise in raw material costs.
From the total data, the basic situation of crude steel supply and demand this year has shown a year-on-year decline. Through the tracking of high-frequency data, the production of iron elements (iron water + scrap steel) in the first 5 months has decreased by 1.5% year-on-year. Combined with the trend of the inventory of the five major types of steel, it is expected that the actual demand for crude steel will be consistent with the production trend, and will also maintain a slight year-on-year decrease.
But the domestic demand for steel plates is significantly differentiated, with the demand for plates represented by hot coils continuing to grow in recent years, and the increment mainly coming from the expansion of demand in the export-oriented manufacturing industry; while the demand for the construction industry continues to shrink, and the continuous decline in the production of ribbed steel and coil ribbed steel can be indirectly proved by this, the average annual decline in the production of ribbed steel in the Steel Network sample enterprises in the past five years has reached 7%. The differentiation of plate and construction material demand has also led to the continuous lifting of the central value of the coil-ribbed steel price spread in recent years.
In combination with the phenomenon that the basis of hot coil has strengthened and the spread of hot coil and coil has expanded in recent years, the production and demand of hot coil are closer to the big sample data of Steel Network, showing a year-on-year growth trend.
The demand increment of hot rolled coil in recent years mainly came from the manufacturing industry, covering machinery, automobiles, shipbuilding, household appliances and other industries. With the upgrading of domestic high-end equipment manufacturing, the expansion of new energy vehicle production capacity, the recovery of global shipping industry driving the increase of new ship orders, and the steady increase of household appliance production both domestically and exported, the above four industries continue to release new steel demand, which provides strong support for the growth of plate demand.
Supply-side disruptions have pushed iron ore and coking coal prices higher, and rising raw material costs have further underpinned steel price support levels. As of June 12, iron ore stockpiles at Port Kembla hit 166 million tons, marking a new five-year high. Although iron ore supply remains generally loose and port inventories keep building up, escalating tensions in the Middle East have lifted iron ore shipping costs by USD 10 per ton. This has lifted prices from a low of USD 95 per ton to USD 111 per ton, with the price fluctuation benchmark moving back above USD 100 per ton. Given steel mills’ bargaining power and iron ore’s current low valuation, the downside potential for iron ore prices is limited. Spurred by output cuts at coal mines in Shanxi and higher coking coal costs, coking coal prices have seen seven consecutive rounds of hikes, totaling an increase of 350 RMB per ton. Market expectations are strong for an eighth price increase; coking coal prices are poised to rise rather than fall before coal mines in Shanxi resume full production.
Hot-rolled coil inventory turned from year-on-year decrease in October 2025 to year-on-year increase, and the year-on-year growth rate remained stable in the first half of 2026 with small fluctuations. Hot-rolled coil inventory can be observed from three dimensions: mill inventory, social inventory (trader inventory), and port inventory (corresponding to export demand). The current year-on-year increase in hot-rolled coil inventory mainly focuses on social inventory, while mill inventory and port inventory maintain a good trend of inventory reduction, and the overall inventory is at a low level.
Both the large and small sample social stocks are on a year-on-year increase. Among them, the small sample social stock is 3.49 million tons, an increase of 60,000 tons compared to the previous month and an increase of 2.69 million tons year-on-year; the large sample social stock is 7.27 million tons, a decrease of 50,000 tons compared to the previous month and an increase of 1.70 million tons year-on-year.
The inventory of hot-rolled coil steel mills and port stocks are both at low levels, and direct supply orders remain stable. During the period of May-June, the Steel Network's small and large sample mill stocks both saw significant reductions, and the stock levels were basically the same as last year. As of June 11th, the small sample mill stock of hot-rolled coil steel was 7.1 million tons, a decrease of 0.2 million tons compared to the previous month and a decrease of 50,000 tons compared to the same period last year; the large sample mill stock was 15.8 million tons, an increase of 100,000 tons compared to the previous month and a decrease of 130,000 tons compared to the same period last year. Relevant research data shows that the current number of days of downstream orders available for hot-rolled coil steel mills is maintained above 20 days. Steel Network disclosed information shows that the port stock of hot-rolled coil steel in the second quarter continued the rapid reduction trend. Since port stocks mainly correspond to export resources to be shipped, its continuous reduction reflects the strong demand for overseas orders, and export is still an important force to support the demand for hot-rolled coil steel.
The basis trend of hot coil in the first half of 2026 lacks obvious trend, with the fluctuation range between -30 and 30 RMB/ton. The basis performance is significantly weaker than that of the same period last year. With the inventory falling back from the high level, the futures price has also gradually shifted from premium to spot and is now at par with the spot. Considering that July and August are the off-season for demand, it is expected that the basis will still maintain a weak operation pattern in the future.
The monthly spread of hot-rolled coil maintained stability, with the fluctuation controlled within 30 RMB. The price difference of rebar contracts from 5 to 10 months fluctuated between -50 and -20 RMB/ton, while the price difference of hot-rolled coil contracts from 5 to 10 months was between -30 and 0 RMB/ton. As of mid-June, the price difference of rebar contracts from 10 to 1 month was -30 RMB/ton, and the price difference of hot-rolled coil contracts from 10 to 1 month was -14 RMB/ton, with the overall monthly spread at a neutral level. In the past two years, the monthly spread trend has more closely followed the absolute price fluctuations. This year, steel prices have shown a range-bound trading characteristic, with a weak trend, and the monthly spread has also shown an oscillating trend.
The focus of the spread of coil and bar has been lifted this year, with the futures spread fluctuating in the range of 150 to 200 RMB/ton, significantly higher than the low point of about 100 RMB/ton in previous years. The expansion of the coil and bar spread has led to a differentiation in profit levels between hot coil and ribbed steel, which is essentially determined by the demand differences between the two. Considering the current trend of demand differentiation in the construction and manufacturing industries, it is expected that the coil and bar spread will not converge.
Driven by the rise in shipping costs and the widening of price differences between domestic and foreign markets, the price of hot-rolled coils once surged to 3,500 RMB/ton. From May to June, the price reached its peak and then declined, fluctuating narrowly around 3,380 RMB/ton recently, showing signs of stabilization. The price of iron ore also reached its peak and then declined, and has stabilized around 760 RMB/ton; the price of coking coal has continued to show a strong trend, continuing to rise. The current pricing of steel shows the characteristics of "weak demand superimposed on cost support". From the supply and demand side, the supply and demand of steel are in a state of tight balance, with little inventory pressure, and the short-term valuation is relatively low, combined with the cost support of coking coal, there is room for catch-up appreciation. However, due to the suppression of weak demand expectations, it is expected that steel prices will not form a trend-upward trend with raw materials, and the judgment of range trading will be maintained. The price fluctuation center of the HC2610 contract can refer to the 33,500~35,000 RMB/ton range. The pricing of hot-rolled coils is first constrained by the overall supply and demand relationship of steel, and its relatively better demand is more reflected through the price difference and basis of the variety.
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