Weekend Market Update: Steel Weakens into Off-Season, BDI Hits 3-Month Low, Hormuz Explodes into New Crisis

Report Period: May 22 (Friday) – May 25 (Monday), 2026

1. Core Judgment This Week: Off-Season Pressure Materializes, Steel Prices Weakly Adjust, Geopolitical Risk Spikes Again

The past week saw China’s domestic steel market formally come under concentrated off-season pressure. The national average rebar price fell by CNY 58/t w/w to CNY 3,432/t, the largest single-week drop since late March. The southern plum rain season is now in full swing, and end-user procurement is limited to rigid demand, leaving the market quiet. Futures weakened across the board: rebar fell 0.50%, HRC dropped 0.73%, and coking coal plunged 6.69%.

At the same time, the Middle East saw an explosive turn over the weekend. President Trump returned urgently to the White House to discuss military strikes on Iran. Iran announced the establishment of a “Persian Gulf Strait Authority” to impose categorized controls on transiting vessels. The Red Sea shipping lane was again hit by a Houthi missile attack, and international oil prices surged to nearly $97/bbl. The Baltic Dry Index (BDI) fell 5% for the full week — its worst weekly performance since early March — before a modest bounce on Friday to 2,991 points.

Trend judgment: Short-term steel prices will remain in a weak consolidation pattern under the dual pressure of a loosening cost floor and softening off-season demand. However, the sudden escalation in the Middle East could trigger a chain reaction across global supply chains, energy costs, and market sentiment. Close attention must be paid to market reactions early this week.

2. China Domestic Market: Rebar Falls CNY 58/t W/W, Southern Plum Rains Suppress Demand

2.1 Weekly Price Moves

According to Mysteel’s May 23 report, the decline in construction steel prices widened significantly this week. As of May 22, the national average price for 20mm Grade 3 seismic rebar in major cities was CNY 3,432/t, down CNY 58/t w/w. The average for 8.0mm HPB300 wire rod was CNY 3,581/t, also down CNY 58/t w/w.

Key city price changes:

• Beijing rebar: CNY 3,250/t, down CNY 100/t w/w
• Hangzhou rebar: CNY 3,290/t, down CNY 50/t w/w
• Wuhan rebar: CNY 3,370/t, down CNY 40/t w/w
• Shanghai rebar: CNY 3,280/t, down CNY 40/t w/w
• Shenyang rebar: CNY 3,480/t, down CNY 50/t w/w

2.2 Tangshan Weekend Steel Market Snapshot (May 23)

Per Mysteel’s Tangshan steel market flash on May 23, the ex-works price of plain carbon billet in Qian’an was unchanged from the prior day at CNY 3,040/t, with warehouse spot including tax quoted around CNY 3,090/t. Downstream finished product prices were temporarily stable, but overall transactions were weak.

Performance by product:

• Section steel: I-beam at CNY 3,370/t, angle steel at CNY 3,370/t, channel steel at CNY 3,330–3,370/t. Market demand was insufficient, and overall trading was weak.
• Strip steel: 145mm narrow strip mainstream quoted at CNY 3,290/t, with weak transactions.
• HRC: Tangsteel open flat at CNY 3,350/t, Anfeng at CNY 3,350/t. Hidden discounts appeared in the market, with average trading.
• Medium plate: Hegang medium plate at CNY 3,490/t, low-alloy at CNY 3,770/t. Jingtang port lock price at CNY 3,470/t, average trading.
• Pipe: Welded pipe at CNY 3,470/t, galvanized pipe at CNY 4,070/t (4-inch 3.75mm new national standard), average trading.

2.3 Tangshan Billet Supply, Demand and Profitability

Supply side: This week, the daily external billet sales volume of 21 sampled enterprises in Tangshan and surrounding areas was approximately 46,900 tonnes, up 1,600 tonnes w/w. Hot metal output remained at elevated levels. Steel mill profitability declined. This week, average hot metal cost excluding tax and average billet cost including tax for mainstream Tangshan sample mills changed little, but the decline in finished product prices exceeded the decline in costs, so average mill profitability dropped.

2.4 Regional Demand Divergence Clear

According to SunSirs analysis, the steel market continued its “south weak, north strong” divergence this week. Northern markets were relatively resilient due to firmer demand, while the south, with the plum rain season fully underway, saw outdoor construction disrupted, lighter trading, and end-users making only sporadic rigid purchases. Weekly apparent consumption of the five major products fell 3.4% w/w, but total national steel inventories still destocked. Social inventories declined for a tenth consecutive week; only mill inventories rebounded slightly, indicating that end-demand still retains some resilience.

Meanwhile, the strongest rainfall this year is about to hit the south. Mysteel’s morning read warns that the south will face its heaviest rains of the year in the coming week, further suppressing the release of building steel demand.

2.5 Mill Margins and Production Dynamics

According to Tang-Song Iron & Steel Intelligence Issue 18, the current steel enterprise profit index stands at CNY 46.47/t, a sharp drop of CNY 33.75/t from the prior week, rapidly giving back earlier margin recovery gains. On the cost side, iron ore prices are trending weakly, and coal/coke prices are temporarily stable. Steel cost support has loosened slightly, but the decline in costs has not matched the decline in finished product prices, so margins are being squeezed from both sides.

On the macro level, industrial output growth slowed in April. The cumulative value-added of industrial enterprises above designated size grew 5.6% y/y in January-April, lower than the Q1 cumulative rate. The momentum of industrial recovery softened marginally. However, high-tech manufacturing value-added rose 12.8% y/y in April, bucking the trend and becoming a key driver of industrial growth.

April investment data was also weak: national fixed-asset investment fell 1.6% y/y in January-April, but after stripping out real estate development investment, it still grew 1.3%. Positive factors of industrial upgrading and new growth driver cultivation are accumulating.

In the real estate market, the stabilization trend of first-tier city home prices was further confirmed in April, but improvement remains concentrated on the price side, and the foundation for a nationwide recovery is still not solid. Total retail sales of consumer goods grew only 0.2% y/y in April, the lowest since 2023, as the pull from “trade-in” programs on existing categories has weakened markedly.

3. Raw Materials: Iron Ore Weakly Oscillates, Coke Market Enters Downward Channel

3.1 Iron Ore

According to SunSirs analysis on May 23, the iron ore market is oscillating lower, with increasing downside risk. The current iron ore market is in a pattern of “high inventories, high valuations, and peaking marginal demand.” On the supply side, although global shipments retreated in the short term, May marks the start of the overseas shipment peak season, and the expectation of incremental supply remains unchanged. On the demand side, mills are mainly procuring on a hand-to-mouth basis, port trading sentiment is average, and traders are relatively cautious.

Tang-Song National Benchmark Prices on May 22:

• Domestic ore: CNY 975/t (unchanged)
• Imported ore: CNY 775/t (up CNY 2/t)
• Scrap: CNY 2,500/t (unchanged)

Mysteel data shows iron ore inventories at 45 major ports are still at high levels, and port destocking is slow. Domestic hot metal output remains high, providing short-term support for ore prices, but terminal finished steel demand is entering the off-season, and the market is cautious about the future. Near-term ore prices are expected to continue a weak consolidation pattern.

3.2 Coke: Downward Channel Opens, Price Cut Expectations Strengthen

This week, the coke market showed major turning signals. The fourth round of coke price hikes stalled after being initiated, with mainstream steel mills yet to respond, and market expectations turned significantly weaker. Steel Market Talk points out that coke price cut expectations are strengthening, and steel prices continue to weakly consolidate.

Port coke spot prices (trade spot exchange delivery):

• Grade 1 (wet-quenched) coke: CNY 1,530/t
• Grade 1 (dry-quenched) coke: CNY 1,730/t
• First-class (wet-quenched) coke: CNY 1,630/t
• Coke fines: CNY 1,240/t
• Coke breeze: CNY 1,020/t

Supply side: coke profits are acceptable, operating rates remain high, and most are actively shipping, with generally low on-site inventories. Demand side: mill hot metal output remains high, providing strong rigid support for coke demand, but mill margins have narrowed and procurement is becoming more cautious. The coke supply-demand structure is gradually loosening, and the steel-coke game continues.

For procurement managers: The coke market is shifting from an “upward channel” to a “downward channel,” and the probability of the fourth round hike failing is rising. If a price cut is implemented, it will ease cost-side pressure for mills, but it also means that steel price cost support is further loosening.

3.3 Scrap

Scrap price adjustments on May 25 summarized: 3 mills raised and 20 lowered prices, with scrap purchase prices generally cut by CNY 10–50/t. During May 22-23, 22 mills lowered scrap purchase prices by CNY 10–50/t. Scrap prices followed finished steel lower, and mills’ willingness to suppress raw material procurement costs increased after margins contracted.

4. Global Shipping: BDI Posts Worst Week Since Early March

4.1 BDI Trajectory

This week, the Baltic Dry Index fell for five consecutive days before bouncing slightly on Friday, but the full-week cumulative decline of 5% marks its worst weekly performance since early March, reflecting overall heightened volatility and pronounced divergence in the dry bulk shipping market.

Key BDI data this week:

• May 21: BDI at 2,964, the 5th consecutive decline, hitting a new low since May 5.
• May 22: BDI at 2,991, up 0.91% day-on-day, snapping the five-day losing streak, with rebounding Capesize rates as the main driver.

Vessel-type performance divergence:

• Capesize index (BCI): at 4,954 on May 22, up 2.48%, but still down about 4.2% for the full week. Average daily earnings rose $1,093to$1,093to41,428.
• Panamax index (BPI): at 2,223, down 2.33%. Average daily earnings fell $882to$882to20,458/day.
• Supramax index (BSI): at 1,567, down 0.25%.

The Capesize rebound was mainly driven by an increase in available vessels on key global routes, combined with a phase of released iron ore freight demand on major transport lanes, improving the supply-demand balance marginally. However, the Panamax decline was more pronounced, with global coal and grain shipping demand retreating phase by phase, and the imbalance of many ships chasing few cargoes further intensifying.

4.2 Impact on Steel Trade

The overall BDI decline reflects weakening seaborne demand for bulk raw materials. However, the sudden escalation in the Middle East could alter this picture in the near term. Red Sea freight rates surged 50% w/w, 12% of global capacity has been forced to detour around the Cape of Good Hope, and Asia-Europe shipping faces delays of 7-10 days. Oil prices surging to around $97/bbl will push up shipping fuel costs. For steel trade, this means export freight could face a new round of upward pressure next week, particularly on Middle East and Europe-bound routes.

5. International Steel Market Dynamics

5.1 China Export Market: Volume Under Pressure, Structure Diverging

According to SCI analysis, China exported 9.498 million tonnes of steel in April 2026, up 4% m/m. Cumulative exports in January-April reached 34.214 million tonnes, down 9.7% y/y. HRC exports in April were 1.1614 million tonnes, down 8.75% m/m, with cumulative January-April HRC exports at 4.8695 million tonnes, down 37.35% y/y. HRC is the core factor dragging down flat product exports.

China’s steel exports have officially entered a new phase of “contracting volume, stable prices, and rising quality.”

Export price competitiveness: China’s HRC FOB export offer rose to $510/t, still significantly below Japan ($560/t) and Turkey ($645/t), with spreads of $50/t and $135/t respectively. Cost-effectiveness supports overseas order willingness. India’s HRC export offer is $505/t, $5/t lower than China.

Core drivers of April’s m/m export improvement:

• China’s steel price competitiveness persists; HRC FOB is markedly lower than Japan and Turkey, with a clear spread advantage.
• The Middle East has a supply gap due to geopolitical disruptions, and inquiry volumes from Southeast Asia and the Middle East recovered m/m.
• Orders from post-holiday production restocking in March were delivered in concentration in April.

Core reasons for the cumulative ~10% y/y export decline in January-April:

• Anti-dumping duties on Chinese HRC in Vietnam, Indonesia, Brazil and others have escalated.
• The EU CBAM carbon tariff has been officially imposed, increasing per-tonne steel costs by $15-20.
• Since 2026, steel exports have been subject to licensing administration, restricting low-value-added ordinary steel exports.

Core factors behind HRC export pressure:

• Vietnam is China’s top HRC export market, but orders have shrunk sharply after anti-dumping policies were implemented, with April exports to Vietnam dropping sharply both y/y and m/m.
• Domestic HRC prices continued to recover while overseas offers remained weak, narrowing the internal-external price spread and compressing export margins.
• Mills are accelerating a shift to a “slab export + overseas re-rolling” model, channeling more resources to slab export and diverting HRC output.

5.2 Indian Market

Indian-origin HRC offers fell another $5-10\mathrm{/}tto$5−10/tto575-580/t CFR Vietnam, as suppliers tried to attract new orders through price cuts. However, due to persistently falling prices, most buyers remain cautious and on the sidelines.

5.3 Middle East Market

Middle East HRC CFR offers range 515−530/t, sourced mainly from China, India, and Turkey, with Chinese resources the most price−competitive. Destination ports are Dubai, Dammam, Jubail. Middle East medium plate CFR offers range 555-575/t.

Iran export ban: Iran has suspended exports of 66 product categories, including billet, HRC, CRC, and galvanized sheet, through May 30, further tightening Middle East flat product supply. After the weekend’s further deterioration, the Iranian export ban could be extended.

5.4 Southeast Asian Market

Southeast Asian billet export prices remained high this week, with Russian mills maintaining firm offers. In the Vietnam market, Indian HRC offers fell another $5-10\mathrm{/}tto$5−10/tto575-580/t CFR Vietnam, but given continuous price declines, buyers remain cautious.

6. Geopolitics: Strait of Hormuz Situation Sees Explosive Turn Over Weekend

This week, the Middle East situation underwent an explosive escalation on May 22-23 — the most tense moment since the conflict erupted 87 days ago — directly impacting global steel and raw material supply chains.

Core events:

1. US military preparations entered a substantive phase. President Trump returned urgently to the White House to oversee the situation and convened the national security team for closed-door discussions on military strikes against Iran. US military and intelligence agencies cancelled weekend leave, and Iran’s western airports were fully shut. The 87-day conflict may reignite fully.
2. Iran announced the establishment of a “Persian Gulf Strait Authority.” This body will impose strict classified controls on transiting vessels, dividing them into friendly, neutral, and hostile categories. Only 35 vessels have been granted passage permits. Nearly 30% of the world’s seaborne oil transit is approaching paralysis.
3. Red Sea shipping lane hit again. On May 22, Yemen’s Houthi forces fired a missile in the Bab el-Mandeb Strait, accurately striking a Greek oil tanker fully laden with 113,000 tonnes of crude oil. This is the third attack on Western commercial vessels this week. Red Sea freight rates surged 50% w/w. 12% of global shipping capacity has been forced to detour around the Cape of Good Hope, with Asia-Europe shipping delayed by 7-10 days.
4. Oil prices surged. Spurred by these developments, international oil prices fluctuated wildly, with NYMEX crude settling at $96.82/bbl. European chemical and steel enterprises have lowered profit forecasts due to soaring costs, and global inflationary pressure has reignited.
5. US-Iran negotiations at full speed. Pakistan’s Army Chief arrived in Tehran on May 22 for emergency mediation, with talks entering a “decisive phase.” But the US demands Iran hand over all highly enriched uranium, while Iran insists on retaining nuclear capability — the gap is huge. Israeli Prime Minister Netanyahu convened an emergency military meeting, concerned the deal could harm Israeli security.

Impact on the steel supply chain:

• The Strait of Hormuz remains effectively closed to transit by Maersk and other major shipping lines; the Middle East situation is highly dynamic and extremely unstable.
• Red Sea freight rates have skyrocketed 50%, with global supply chains facing fracture risk.
• Oil prices at around $97/bbl will significantly push up shipping fuel costs, further squeezing export margins.
• Iran’s steel product export ban (through May 30) may be extended as the situation deteriorates, and the Middle East flat product supply gap will persist.
• Export enterprises with Middle East routes are advised to reassess the logistics risk of all in-transit orders at the start of this week and explicitly mark freight and war risk premiums as “temporary surcharges” in quotations.

7. Export Policy and International Trade Barriers

7.1 Precision Adjustment of Export Tax Rebate Policy

Compared to previous years, the 2026 tax rebate rate adjustments focus more on precision in product classification. The policy no longer treats “steel” as a blanket category but makes finer distinctions based on processing depth, alloy composition, and end-use. Rebate rates applicable to ordinary HRC and high-end galvanized sheet or silicon steel may differ markedly, guiding resources toward higher-tech fields.

7.2 Export Licensing Tightens

Since January 1, 2026, steel exports are subject to licensing administration. Shipments without certificates, with falsely declared codes, or split consignments have been specifically targeted by customs. After the implementation of export licensing for steel products, some low-value-added products have notably shifted to domestic sales, with steel exports falling 9.9% y/y in January-March 2026.

7.3 CBAM Carbon Tariff Officially Imposed

The EU CBAM has entered its substantive charging phase. The per-tonne CBAM cost increase for steel exported to the EU is $15-20, markedly eroding the price competitiveness of Chinese steel in the EU market. The first CBAM certificate price is EUR 75.36/t.

7.4 Trade Remedy Cases Continue to Pile Up

In April 2026, 23 foreign anti-dumping or countervailing duty investigations or rulings targeted Chinese steel products. Products involved include PC strand, HRC, billet, wire rod, non-oriented electrical steel, galvalume steel, and low-ash metallurgical coke. The US and India are the most active initiators.

8. Mill Dynamics and Supply-Side Shifts

8.1 Environmental Inspection Exposes Non-Compliant Capacity

On May 23, the First Central Ecological and Environmental Protection Inspection Team publicly reported that Fushun and Yingkou cities in Liaoning Province had built steel projects in violation of regulations, illegally added outdated capacity, and inadequately addressed air pollution control in the carbon sector. This report sends a signal of tightening oversight and may affect subsequent supply from the northeastern region.

8.2 Northeast Environmental Inspections Impact Supply

In mid-to-late May, the northeast market was affected by environmental inspections, with some enterprises scheduling blast furnace maintenance, causing some supply-side contraction. However, this round of inspections only covered the northeast market, involved a relatively small number of enterprises, and was of short duration, so the overall national supply impact is limited. Capacity utilization rates continued their declining trend.

8.3 Mill Maintenance Dynamics

• Jute Steel: Plans to stop its medium bar production line for 10 days of maintenance starting May 25, expected to affect about 10,000 tonnes of 60-120mm bar output.
• A Jiangsu stainless steel mill: Plans to begin a roughly 26-day maintenance shutdown on June 6, affecting about 65,000 tonnes of output, mainly 200-series narrow strip.

8.4 Henan and Hubei Mill Dynamics

Henan mill rebar output was flat m/m but dropped sharply both w/w and y/y. On one hand, environmental production restrictions and capacity replacement policies have had an impact, and some short-process mills have yet to resume production. On the other, weak market demand has led mills to proactively cut production and destock, sharply reducing rebar scheduling and shifting mainly to non-rebar steel grades. However, the recent trading atmosphere has been poor, shipments are blocked, and inventories have accumulated slightly. Hubei mill rebar output edged down 0.7% w/w.

9. Macro Policy and Liquidity Conditions

9.1 Macro Policy Continues to Deliver

The NDRC stated it is formulating supporting documents to accelerate the implementation of artificial intelligence and further enhance factor guarantees. Meanwhile, “stabilizing growth” policies continue to be rolled out, with equipment manufacturing and high-tech manufacturing maintaining relatively rapid growth, providing medium-to-long-term support for steel demand.

Shanxi Province has planned 1,594 major projects for the “15th Five-Year Plan” period, with a total investment of CNY 4.6 trillion. The NDRC also indicated it will intensify efforts to advance major project construction, refining the dynamic mechanism of “implementing a batch, advancing preliminary work for a batch, reserving a batch, and planning a batch.”

9.2 April Economic Data Weak

Mysteel’s “Seven-Day Insight” summarized key macro data for the week:

• April industrial value-added growth slowed, but high-tech manufacturing (+12.8% in April) bucked the trend and expanded.
• Fixed-asset investment fell 1.6% y/y in January-April, but grew 1.3% after stripping out real estate.
• April retail sales growth was near zero (+0.2%), with consumer recovery momentum clearly insufficient.
• Global government bond yields rose rapidly, with inflation expectations and geopolitical factors creating a systematic shock.

10. Low-Carbon Steel and Green Transition Tracking

10.1 EU CBAM Substantive Progress

The EU CBAM’s first certificate price is EUR 75.36/t, and it has been officially imposed. Per-tonne steel export costs to the EU have increased by $15-20. CBAM, together with anti-dumping duties and quota restrictions, forms a “triple policy closure,” creating systemic barriers for Chinese steel exports to Europe.

10.2 Newly Revised Steel Industry Capacity Replacement Measures

Mysteel reports that the newly revised “Steel Industry Capacity Replacement Implementation Measures” further strictly control total capacity and strictly prohibit new capacity additions. Combined with the environmental inspection report exposing illegal capacity in Liaoning, the intensity of capacity control is further strengthening.

10.3 Green Transformation of Export Structure

Under policy guidance, mills are proactively optimizing their export structures, reducing low-value-added product exports like ordinary carbon HRC, and shifting toward higher-margin varieties such as high-strength steel, weathering steel, and automotive sheet. Steel exports have officially entered a new phase of “contracting volume, stable prices, and rising quality.”

11. Special Analysis: HRC Export Model Transformation and New Global Trade Landscape

According to a Mysteel special report, China’s HRC exports are undergoing a model transformation from “volume for price” to “price determining volume.” May 2026 data shows China’s HRC FOB offer has risen to $510/t. Although still below Japan ($560/t) and Turkey ($645/t), the narrowing price advantage has caused overseas customers’ willingness to book orders to diverge.

Meanwhile, China’s steel export structure is undergoing profound change. With HRC direct exports under pressure, mills are accelerating the shift to a “slab export + overseas re-rolling” model. In March 2026, billet exports hit a new high for the year, with order books already stretching into July and beyond. ASEAN, facing a supply gap due to Vietnam’s halt and geopolitical disruptions, has seen its billet shortage widen, and China is rapidly filling the gap with its capacity, logistics, and cost advantages.

Takeaway for export sales managers: Billet and medium plate export opportunities are overtaking HRC. Rigid procurement demand for medium plate from Middle East energy projects, infrastructure construction demand from Africa, and the billet shortfall in ASEAN constitute the three major incremental markets for current Chinese steel exports.

12. Key Cross-Cutting Trends Summary

13. Actionable Recommendations

🔴 For Procurement Managers

🔵 For Export Sales Managers

⚡ Urgent Alert for All Managers

The Middle East geopolitical situation escalated suddenly over the weekend:

• US President Trump rushed back to the White House to discuss military strikes on Iran; US military cancelled leave and entered preparation status.
• Iran announced the establishment of the “Persian Gulf Strait Authority” to impose strict categorized controls on transiting vessels; nearly 30% of the world’s seaborne oil transit lane is approaching paralysis.
• Red Sea freight rates surged 50% w/w; 12% of global capacity diverted around the Cape of Good Hope; Asia-Europe shipping delayed 7-10 days.
• Oil prices surged to $96.82/bbl.

For all orders involving Middle East, Red Sea, or Europe-bound routes, immediately at the start of this week:

1. Confirm the real-time location and expected arrival time of goods in transit.
2. Assess the extra voyage days (+7-10 days) and fuel costs from Cape of Good Hope detour.
3. Negotiate with buyers on the sharing mechanism for freight and war risk surcharges.
4. Formulate alternative port plans (Jeddah, Sohar remain accessible).
5. For new orders about to be shipped, explicitly mark freight and war risk premiums as “temporary surcharges” in quotations.

📧 Contact Email: amy@amyinsights.com
🌐 Website: amyinsights.com

For in-depth weekly reports on each regional market (Southeast Asia, South Asia, Middle East, Africa, Europe Core, North America, South America, CIS, and more), or customized procurement/sales strategy analysis, contact the Amy SteelInsights team. Annual subscribers receive complimentary real-time flash reports to ensure you never miss information critical to your decisions.