China's crude steel production for January-May 2026 totalled 415.5 million tonnes, a 3.9% decline year-on-year. March output fell 6.3% to its lowest March level in six years. Q1 output was down 4.6% year-on-year to 247.6 Mt. The ongoing property sector crisis is the primary drag: real estate construction remains weak, and rebar's share of steel production has fallen from 23% in 2019 to approximately 13%.
Chinese steel exports also softened. Export shipments in the first four months of 2026 dropped 9.7% to 34.2 Mt, with April exports down 9% year-on-year. Overseas buyers have shown reluctance to purchase at elevated export price levels, while trade barriers are rising in Southeast Asia and other destination markets.
Iron ore imports defied the steel production decline. January-February imports reached 210 Mt, up 10% year-on-year. The key insight from Reuters commodity columnist Clyde Russell is that most of the excess imports are going into storage, not steelmaking. Port inventories near 160-167 Mt represent a massive buffer.
Analysts at ING, Capital Economics, and the World Bank all project iron ore averaging approximately $95/t in 2026, below current spot levels. The bearish case rests on rising seaborne supply — including the Simandou mine in Guinea, which made its first shipment in late 2025 — combined with structurally weak Chinese construction demand.
Iron ore buyers face a structurally bearish setup: Chinese steel demand is declining, port inventories are at record highs, and new supply from Simandou is arriving. The ING and World Bank consensus of $95/t suggests current levels around $101/t offer limited upside. However, occasional supply scares — like the BHP Port Hedland strike risk — will create short-term bounces. Buyers should focus on prompt purchases rather than forward contracts at current premiums.