A flurry of domestic and international macroeconomic policies and economic data have outlined a new development trajectory for the steel industry. The Politburo meeting and the Central Economic Work Conference consecutively set the tone for economic work in 2026, clearly stating “adherence to domestic demand as the main driver” and deploying a “more proactive and effective” combination of macroeconomic policies, injecting a strong boost into downstream demand expectations for the steel industry. Simultaneously, a new regulation directly impacting the industry’s foreign trade landscape was implemented—the Ministry of Commerce and the General Administration of Customs announced the implementation of export license management for certain steel products, effective January 1, 2026. Internationally, the Federal Reserve implemented its third interest rate cut this year as expected, but the surge in initial jobless claims in the United States highlights the continued complexity of the global economic environment. Against this backdrop, domestic steel market data showed divergence: blast furnace capacity utilization decreased by 1.3% week-on-week, indicating a contraction in supply; while iron ore and rebar spot prices declined, reflecting that the actual demand capacity still needs to be observed. Amidst a backdrop of macroeconomic support and industry adjustments, the steel industry is at the intersection of a new policy cycle and a market cycle.
I. Comprehensive Macroeconomic Policy Implementation: Domestic Demand-Driven and Counter-Cyclical Adjustments at the Core
A series of high-level meetings outlined a clear blueprint for next year’s economic work, with a core focus on expanding domestic demand and strengthening counter-cyclical adjustments, which constitutes a medium- to long-term positive for the steel industry.
The central government has set the tone for “proactive and effective” measures, with both fiscal and monetary policies becoming increasingly loose. The Politburo meeting on December 8th first pointed the way, emphasizing “adhering to the principle of seeking progress while maintaining stability, and improving quality and efficiency,” and clarifying the continuation of a more proactive fiscal policy and a moderately loose monetary policy. The Central Economic Work Conference held subsequently on December 10th and 11th further refined the deployment, proposing to “maintain the necessary fiscal deficit, total debt size, and total expenditure,” and to “flexibly and efficiently utilize various policy tools such as reserve requirement ratio cuts and interest rate cuts.” The meeting listed “stabilizing investment” as one of its key tasks, explicitly proposing to “appropriately increase the scale of central government budgetary investment” and “fully leverage the role of various government investment funds, such as ‘major projects’ and newly issued local government special bonds.” These statements directly target traditional steel-demanding sectors like infrastructure and major projects, and are expected to translate into tangible results next year, stabilizing the fundamentals of steel consumption.
Multiple ministries responded intensively, coordinating efforts to address “involution” and expand investment. Following the meeting, the National Development and Reform Commission (NDRC), the Ministry of Finance, and the People’s Bank of China (PBOC) quickly convened meetings to convey the spirit of the meeting, signaling a coordinated implementation. The NDRC proposed to “comprehensively address ‘involutionary’ competition” and “improve capacity management in key industries,” which is highly relevant to the long-standing problems of overcapacity and low-price competition in the steel industry, indicating a potential optimization of the industry’s competitive ecosystem. The Ministry of Finance explicitly stated it would “issue ultra-long-term special treasury bonds” to support “major projects.” The Ministry of Transport focused on “coordinating the construction, upgrading, and digital transformation of transportation infrastructure” and “expanding effective investment in transportation.” The State-owned Assets Supervision and Administration Commission (SASAC) has required central enterprises to “promote the implementation of a number of major projects to support the expansion of domestic demand with increased investment.” This series of deployments, from funding guarantees to project implementation, has built a complete chain supporting steel demand.
Real estate policies have been optimized to stabilize the market. The meeting’s tone on the real estate market has attracted much attention, proposing “city-specific policies to control new supply, reduce inventory, and optimize supply,” and “encouraging the acquisition of existing commercial housing for the purpose of affordable housing, etc.” Compared with the past, the policy places greater emphasis on digesting existing inventory and optimizing the structure, aiming to promote a soft landing for the real estate market. For construction steel demand, this means a shift from high-speed growth to structural, stable demand related to urban renewal and affordable housing, which is conducive to smoothing market fluctuations.
II. New Regulations for Steel Export Management: Licensing System Guides Structural Optimization
Core of the New Policy: Export license management will be implemented for some products. On December 12, the Ministry of Commerce and the General Administration of Customs jointly issued an announcement stating that, starting January 1, 2026, export license management will be implemented for certain steel products. According to the official interpretation, this move is “an important measure to guide the standardized export of steel products and thus promote the high-quality development of the steel industry,” aiming to “maintain the global steel supply and demand pattern and trade balance.”
Market Interpretation: “Focusing on Major Products and Letting Go of Minor ones,” Precise Regulation. Industry research firm Mysteel points out that the products included in this management exhibit a “focus on major products and letting go of minor ones” characteristic. It includes both primary, low-value-added products such as steel billets and some high-end steel products, but does not cover all steel exports in a “one-size-fits-all” manner. This selective inclusion reflects the policy’s precise regulatory approach: the primary goal is to optimize the export structure, restricting the large-scale outflow of low-value-added products while ensuring international market access for high-tech, high-value-added products; secondly, it aims to avoid disorderly competition and potential trade frictions through standardized management. In the short term, some companies may accelerate the clearing of related product inventory before the end of the year to avoid the additional compliance costs after the new regulations take effect, or there may be a temporary phenomenon of “exporting to domestic sales,” putting some pressure on the domestic market supply of related products. In the long term, the policy will force companies to improve product competitiveness and move towards the high end of the industrial chain.
III. Domestic Economic Data and Industrial Policy Highlights
In addition to the macro-level policy direction and new export policies, several economic data and industrial policies this week also conveyed positive signals.Financial data is stable, and price indicators are recovering. Data from the People’s Bank of China shows that the cumulative increase in social financing in the first 11 months reached 33.39 trillion yuan, a year-on-year increase, indicating that financial support for the real economy remains solid. The CPI rose 0.7% year-on-year in November, with the increase widening; the PPI rose for two consecutive months, showing that domestic price levels are recovering moderately, which helps improve the profit expectations of industrial enterprises.
Foreign trade maintains growth, and the automotive industry is becoming more regulated. Data from the General Administration of Customs shows that in the first 11 months, my country’s total import and export value of goods increased by 3.6% year-on-year, and exports increased by 6.2%, demonstrating resilience. At the industry level, the State Administration for Market Regulation publicly solicited opinions on the “Guidelines for Compliance of Pricing Behavior in the Automobile Industry,” explicitly prohibiting price collusion and dumping below cost. This will help regulate the automotive industry chain, especially the procurement order of upstream steel parts, and is of positive significance for stabilizing steel prices and protecting the interests of compliant steel mills.
International institutions have raised their growth forecasts for China. The International Monetary Fund (IMF) and the World Bank have successively raised their economic growth forecasts for China in 2025-2026, reflecting the international community’s increased confidence in the steady and positive development of the Chinese economy. This is conducive to stabilizing market expectations from an external perspective.
IV. Industry Data Tracking: Weak Supply and Demand, Cost Support Faces Test
Supply contracted slightly, mainly due to routine maintenance and temporary shutdowns at some steel mills. The capacity utilization rate of 314 coal washing plants nationwide increased by 4.6% month-on-month, indicating a short-term rebound in coking coal supply. This supply-side contraction provided some support for steel prices, but the effect was limited.
Demand remained weak, putting pressure on steel prices. In the spot market, prices of major steel products fluctuated. Iron ore and rebar prices declined month-on-month. Downstream demand indicators were also pessimistic: daily retail sales of passenger cars averaged 42,000 units, a significant year-on-year decrease of 32%, reflecting pressure on steel demand for automobiles. Concrete prices remained stable, but actual transactions in the building materials market did not increase significantly. This confirms that despite positive macroeconomic expectations, current end-user demand, especially in the construction and manufacturing sectors, is still in a slow recovery phase, making it difficult to support a sustained rise in steel prices.
Cost-side support factors are complex. Although coking coal prices remained stable this week, their price center remained high due to the normalization of domestic coal mine safety inspections and limited import replenishment. While iron ore prices saw a slight decline, the absolute price remained high. Overall, cost support for steel prices remains, but the squeeze on steel mill profit margins from both ends has not fundamentally changed.
V. Financial Markets and International Dynamics: Interest Rate Cuts and External Risks Coexist
The Federal Reserve implemented its third interest rate cut, but economic data revealed concerns. As expected, the Fed announced a 25 basis point rate cut, its third this year, aimed at addressing pressures of slowing economic growth. However, data from the U.S. Bureau of Labor Statistics showed that initial jobless claims surged by 44,000 to 236,000 in the week ending December 6, the largest increase and highest level since March 2020, indicating that the U.S. labor market may be cooling rapidly. This contradictory signal makes the future global economic outlook even more uncertain.
Commodities and stock markets showed divergent performance. Domestic commodity futures markets saw mixed results, with silver and crude oil leading the gains, while ferrous metals remained relatively stable. Globally, China’s ChiNext index performed strongly, rising 2.74%, while the US Nasdaq index fell 1.62%, showing a divergent trend. The US dollar index fell slightly by 0.62%, closing at 98.39.
The international trade environment remains challenging. Mexico announced it would impose tariffs on some products from China and other Asian countries, and the Ministry of Commerce has initiated a trade and investment barrier investigation in response. Meanwhile, consultations between China and the EU regarding the anti-subsidy case on electric vehicles are still ongoing. These events remind us that steel products, as sensitive commodities in international trade, may still face a complex trade environment in the future.
Note: Reprinted from Steel.com
