Steel: Supply and demand lack a driving engine, passively absorbing cost fluctuations (Qiu Yuecheng, Practitioner Qualification No.: F3046854; Trading Advisory Qualification No.: Z0016941). On the demand side, steel demand in the first three quarters was strong externally but weak domestically, with domestic long product and flat product demand both declining year-on-year. From January to August, external demand for crude steel increased by 3.08% year-on-year, while domestic demand fell by 4.02% year-on-year; from January to September, weekly average apparent demand for rebar was 1.913 million tons, down 7.7% year-on-year; weekly average apparent demand for hot-rolled coil was 2.989 million tons, down 6.1% year-on-year.

From the perspective of domestic demand, from January to August, investment in real estate, infrastructure, and manufacturing fell by 19.9%, 4%, and 2.3% year-on-year respectively, while housing sales, new construction starts, construction in progress, and completions fell by 12.1%, 24.9%, 12.8%, and 23.7% year-on-year respectively. Overall domestic demand highlights are difficult to find, and market expectations for fourth-quarter demand remain pessimistic. Although steel exports once declined due to密集 overseas anti-dumping measures, they overall maintained strong resilience. From January to August, steel exports fell 3% year-on-year, with monthly exports from May to August all exceeding 10 million tons, and exports from June to August all showing positive year-on-year growth. From January to August, billet exports surged 52% year-on-year. It is expected that steel and billet exports will remain at high levels in the fourth quarter, and the pattern of strong external and weak domestic steel demand may be difficult to change.

On the supply side, from January to August, crude steel and pig iron output both fell 3.1% year-on-year, with August daily average output of crude steel and pig iron at 2.4068 million tons and 2.1824 million tons respectively, down 3.01% and 1.02% month-on-month respectively. From January to August, rebar output fell 11.8% year-on-year, and medium-thick wide steel strip output fell 4.6% year-on-year. Overall, amid sluggish demand and low profitability, steel mill production is also at a relatively low level, and the domestic market is in a situation of both weak supply and weak demand. Assuming annual crude steel output falls by 30 million tons year-on-year, daily crude steel output from September to December would drop to around 2.287 million tons, a decrease of about 120,000 tons from August daily output, leaving room for further supply declines in the fourth quarter.

From the inventory perspective, inventory pressure was relatively high from January to July this year. Since August, output declines have exceeded demand declines, and inventory destocking has been better than the same period last year, with high inventory pressure significantly digested. Currently, inventories of the five major品种, rebar, wire rod, hot-rolled coil, medium plate, and cold-rolled coil fell 1.9%, 9%, and rose 11.6%, fell 1.8%, and fell 7.7% year-on-year respectively. Among the five major varieties, except for hot-rolled coil which faces relatively greater inventory pressure, other varieties have inventories below the same period last year. However, among non-five-major materials, inventories of billet, section steel, strip steel, special steel, and industrial wire rod are all significantly higher than the same period last year, with total non-five-major material inventory up 14.5% year-on-year, and overall inventory still faces some destocking pressure.

From the cost perspective, in the first half of this year, long-process steel mills had some profit margin for most of the period. In the second half, under the influence of sharp increases in coal and coke prices, steel mill profits continued to decline. Especially since August, the loss-making scope among steel mills has continued to expand, with the overall loss-making proportion now exceeding 90%. Currently, coking coal spot supply recovery remains relatively slow, and iron ore is also relatively firm with support from sea freight, so overall costs still provide strong support for steel prices. In summary, fourth-quarter steel demand will remain at a relatively low level, supply also has some room for decline, and the market is in a situation of both supply and demand declining, with supply and demand lacking a driving engine. Currently, steel mill profitability is at a low level, coal and coke price volatility elasticity is relatively large, and fourth-quarter steel prices may passively absorb cost fluctuations, overall in a range-bound pattern supported by costs at the bottom and production cuts providing a floor.

Iron Ore: Loose supply pattern continues, but bottom support is also relatively strong (Liu Xi, Practitioner Qualification No.: F03087689; Trading Advisory Qualification No.: Z0019538). On the supply side, overseas supply performed impressively in the first three quarters, with increments mainly from Australia and non-mainstream countries, while Brazilian shipments declined slightly. In terms of imports, from January to August, China's cumulative iron ore imports increased by 44.77 million tons year-on-year, of which imports from Australia increased by 15.51 million tons, from Brazil increased by 8.9 million tons, from Guinea increased by 7.92 million tons, from Liberia increased by 4.77 million tons, and from Peru increased by 5.92 million tons. The fourth quarter is traditionally the peak shipping season for Australia and Brazil, and Simandou mine shipments will also accelerate after the rainy season ends. It is expected that fourth-quarter iron ore shipments will continue to increase both year-on-year and quarter-on-quarter, and full-year iron ore imports may increase by about 46.8 million tons year-on-year. On the domestic mine side, performance in the first three quarters fell short of expectations, and it is expected to remain at a low level in the fourth quarter, with full-year domestic mine output possibly declining by about 12 million tons year-on-year.

On the demand side, according to statistics bureau data, from January to August, China's pig iron output decreased by 18.02 million tons year-on-year. Assuming full-year pig iron output decreases by 25 million tons year-on-year, daily average pig iron output from September to December would drop to 2.03 million tons, a quarter-on-quarter decline of about 7% from August daily average output, and a year-on-year decline of about 2.8% compared with September to December last year. However, from January to August, the decline in hot metal output under the Mysteel口径 was relatively small, falling only 3.33 million tons year-on-year, and the latest daily average hot metal output remains at a relatively high level of 2.3566 million tons. Overseas pig iron output is relatively stable, with demand in Europe, Japan, and South Korea remaining at low levels, but demand in India, Turkey, and other countries increasing, so overall iron ore demand still has some resilience. On the inventory side, port iron ore inventories continued to accumulate at high levels in the first three quarters, and steel mill inventories also increased. Currently, iron ore inventory at 47 ports increased by 26.66 million tons year-on-year, while imported ore inventory at 247 steel mills decreased by 1.73 million tons year-on-year. High inventories will still suppress iron ore price trends.

Comprehensively, fourth-quarter iron ore supply is expected to continue increasing, demand will decline somewhat, port iron ore inventories are still expected to accumulate, and the iron ore supply-demand pattern will continue to be loose, suppressing price trends. It is expected that the center of gravity for iron ore prices may still shift slightly lower in the fourth quarter. However, it is worth noting that over the past two years, the iron ore cost curve has shifted up significantly. Rising mining costs and freight rates provide strong cost support for iron ore prices. For example, the latest sea freight from Brazil to China has reached about $43 per ton, nearly double the level at the end of last year. Support for iron ore prices at the $90 line remains relatively strong. It is expected that fourth-quarter iron ore prices will overall continue a range-bound weak oscillation pattern.

Coking Coal and Coke: Supply recovery expectations exist, price center may decline (Zhang Chunjie, Practitioner Qualification No.: F03132960; Trading Advisory Qualification No.: Z0024275). Coking Coal: On the supply side, from January to August 2026, China's cumulative raw coal output was 3.06 billion tons, down 3.3% year-on-year; from January to July 2026, domestic cumulative washed coking coal output was 259 million tons, down 6.4% year-on-year. After the Shanxi mine accident in late May 2026, coking coal output in Shanxi declined significantly. According to Mysteel statistics, as of September 21, 2026, there were still 52 coking coal mines shut down in Shanxi, involving capacity of 56.6 million tons. Relevant authorities mentioned coal supply guarantees, and large-scale coal mine resumption may occur after October. Domestic coking coal production has recovery expectations. In terms of imports, from January to August 2026, China's cumulative coking coal imports were 93.5499 million tons, up 28.78% year-on-year. The import increment mainly came from continued volume increases in Mongolian coal, Russian coal, and Australian coal. In the fourth quarter, Mongolian coal customs clearance is expected to recover, and 2026 coking coal imports are expected to reach about 135 million tons.

On the demand side, from January to August 2026, national cumulative coke output was 334 million tons, up 0.3% year-on-year. In the first half, coking plant production profits were relatively good. In late May, coking coal prices strengthened due to safety production accidents, and coking plant production profits were somewhat squeezed. In August, the maximum loss for coking plants approached 200 yuan/ton. Independent coking enterprises saw relatively large output fluctuations, while steel mill coking enterprises maintained relatively stable production. It is expected that fourth-quarter coke output will remain relatively tight, with full-year coke output at around 490 million tons. Overall, relevant authorities mentioned supply guarantees and accelerating coal mine resumption under safety production prerequisites. Coking coal output has recovery expectations in the fourth quarter, and structural shortages of certain coking coal grades will improve. Although terminal steel mill profits are poor, coking enterprise production profits are relatively acceptable, providing some support for coking coal demand. The price center of the main coking coal contract may decline in the fourth quarter. Key focus should be on coking coal supply recovery.

Coke: On the supply side, from January to August 2026, national cumulative coke output was 334 million tons, up 0.3% year-on-year. In the first half, coking plant production profits were relatively good, and in March coking enterprise profits expanded明显. In late May, coking coal prices strengthened due to safety production accidents, and coking plant production profits were somewhat squeezed. In August, the maximum loss for coking plants approached 200 yuan/ton. Some coking plants experienced passive production cuts due to shortages of high-quality main coking frame coal. Coking profit changes have a greater impact on independent coking enterprises, and independent coking enterprises saw relatively large output fluctuations, while steel mill coking enterprises maintained relatively stable production. Although hot metal output has declined, it remains at a high level overall, and coke demand has some support. It is expected that fourth-quarter coke output will be relatively tight, with full-year coke output expected at around 490 million tons.

On the demand side, terminal demand continues to operate weakly, raw materials remain relatively strong, and overall steel mill production profits are poor. From January to August 2026, China's crude steel output was 651.85 million tons, down 3.1% year-on-year; pig iron output was 563.4 million tons, down 3.1% year-on-year. Downstream demand is operating weakly, resulting in relatively reduced coke demand. Exports were affected by the domestic coke phased shortage, and third-quarter exports declined slightly. It is expected that fourth-quarter exports will still recover to high levels, with full-year coke exports at around 8.2 million tons, and full-year total coke demand expected at around 496 million tons. Overall, raw material coking coal prices remain relatively strong, and coking enterprises pass cost pressure to steel mills by raising coke prices. However, terminal demand is relatively weak, steel mill profits are poor, and the room for coke price increases is limited. Overall, fourth-quarter coke supply and demand may maintain a tight balance, and coking enterprise profits may remain at meager levels. Key focus should be on coking coal prices and profit changes.

Ferroalloys: Cost side has support, but supply and demand levels remain relatively weak (Sun Chengzhen, Practitioner Qualification No.: F03099994; Trading Advisory Qualification No.: Z0021057). Manganese Silicon: Supply: Operating rates of manganese silicon producers in Ningxia, Guizhou, and other regions are at relatively low levels compared with the same period in recent years. According to Mysteel data, as of September 24, China's manganese silicon producer operating rate was 30.33%, Inner Mongolia 65.39%, Ningxia 47.48%, Gansu 28.93%, Guangxi 17.45%, and Yunnan 83.57%. Demand: The weekly manganese silicon demand value from sample steel mills remains relatively low. From January to August, national cumulative crude steel output was 651.847 million tons, down 2.97% year-on-year. As of September 24, the weekly manganese silicon demand value from sample steel mills was 108,300 tons, down 2.41% month-on-month, with the absolute value at a low level compared with the same period in recent years. Inventory: Although manganese silicon sample enterprise inventories declined month-on-month, they remain relatively high year-on-year. As of September 24, total inventory of 63 sample enterprises was 356,200 tons, up 122,400 tons year-on-year. In September, steel mill manganese silicon inventory availability was 16.42 days, up 0.49 days year-on-year.

Cost and Profit: Manganese silicon production costs showed mixed changes. Spot production profits in most producing regions increased month-on-month, but currently remain at a loss. Mysteel data shows that third-quarter Tianjin Port manganese ore prices oscillated lower, but electricity price costs varied across producing regions. Third-quarter spot production costs for manganese silicon in northern regions overall increased, while spot production costs in southern regions declined month-on-month. Except for Inner Mongolia, spot production profits in most producing regions increased month-on-month, but currently spot production profits in all major producing regions are negative. Summary: Demand is weak, and fundamentals have limited upward driving force. Since current spot production profits for manganese silicon are poor, subsequent manganese silicon output is expected to decline. Demand remains relatively weak, and terminal demand is unlikely to improve significantly in the short term. Cost-side downside is limited, and manganese ore traders are unwilling to sell at low prices. Inventory pressure is gradually weakening, with sample enterprise inventories declining month-on-month for several consecutive weeks. Overall, weak terminal demand constrains upside room for manganese silicon futures prices. Subsequent attention should be paid to cost-profit changes and their impact on supply. It is expected that fourth-quarter manganese silicon futures prices will mainly operate in a wide oscillation range.

Ferrosilicon: Supply: Weekly ferrosilicon output is gradually declining month-on-month. As of September 24, weekly ferrosilicon output was 112,800 tons, declining month-on-month for two consecutive weeks. Operating rates of ferrosilicon producers in Xinjiang, Gansu, Ningxia, and Qinghai all declined. Demand: Steel demand is weak, while magnesium ingot output increased year-on-year. From January to August, national cumulative crude steel output was 651.847 million tons, down 2.97% year-on-year. As of the week of September 24, the weekly ferrosilicon demand value from sample steel mills was 17,533 tons, down 2.89% month-on-month, at the lowest level compared with the same period in recent years. As of the week of September 18, daily average magnesium ingot output was 3,026 tons, up 22.5% year-on-year. Inventory: Ferrosilicon sample enterprise inventories increased year-on-year. As of September 24, ferrosilicon inventory of 60 sample enterprises was 80,390 tons, down 1,900 tons month-on-month, but up 18,930 tons year-on-year. Ferrosilicon warehouse receipts plus valid forecasts totaled 5,451 lots, down 13,110 lots year-on-year.

Cost: Spot ferrosilicon production costs increased month-on-month, and spot production profits declined month-on-month. In the third quarter, prices of major ferrosilicon production costs such as blue carbon small material increased significantly, and spot production costs in major producing regions increased by 340-1,100 yuan/ton quarter-on-quarter. Spot production profits declined by 120-780 yuan/ton month-on-month, and currently spot production profits in all major producing regions are negative. Summary: The cost side has support, but weak supply and demand make it difficult to support sustained upward movement in ferrosilicon futures prices. Third-quarter spot ferrosilicon production costs rose significantly, providing some support for ferrosilicon prices, but current spot production profits are negative and weekly output continues to decline. On the demand side, steel demand is weak, non-steel demand is acceptable, and overall boosting force is limited. Although sample enterprise inventories increased month-on-month, warehouse receipts plus valid forecasts are relatively low year-on-year. Overall fundamentals have limited driving force. It is expected that fourth-quarter ferrosilicon futures prices will still mainly operate in a wide oscillation range.

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