Weekend Market Update: Hormuz Shuts Down, Coke Costs Surge Again, and Steel Demand Shows Fragile Rebound

Report Period: June 19 – June 22, 2026

1. Executive Summary: Geopolitical Shock Meets Cost-Push Pressures

The Dragon Boat Festival weekend delivered a sudden geopolitical escalation: on June 19, Iran officially closed the Strait of Hormuz, reducing vessel traffic to zero. This immediately severed the primary maritime artery for Middle East steel and raw material trade. Simultaneously, China’s coke market saw its eighth consecutive price hike implemented on June 22, pushing cumulative increases to CNY 400–440/t since late May, while iron ore weakened to $98.9/dmt, partially cushioning but not offsetting the cost blow.

China’s domestic steel market remained in a narrow, weak consolidation pattern. Rebar prices edged down to CNY 3,250/t in Shanghai, while hot-rolled coil held relatively firm at CNY 3,380/t. Apparent consumption of the five major products staged a modest technical rebound of 3.1% week-on-week, and total inventories resumed destocking after two weeks of buildup. Yet the underlying demand picture remains fragile — constrained by southern plum rains, northern heatwaves, and the holiday lull.

For procurement managers, the cost floor is rising again. For export sales managers, the Hormuz closure represents an immediate logistics crisis requiring urgent rerouting, while the EU’s CBAM expansion and July 1 safeguard quota cut loom large on the horizon.

2. China Domestic Market: Prices Weaken Marginally, Demand Rebounds from a Low Base

2.1 Key Price Indicators (June 15–21)

Source: Mysteel, 10jqka News

During the Dragon Boat Festival (June 19–21), trading was thin. Tangshan billet held at CNY 3,000/t ex-works, with downstream products largely stable but transactions subdued. Rebar futures fluctuated in the CNY 3,120–3,250/t range, while HRC futures settled around CNY 3,370/t. The spread between HRC and rebar remained above CNY 200/t, reflecting structural divergence — flat products outperforming longs.

Notable mill adjustments: Zenith Steel cut late-June rebar prices by CNY 50/t; Shagang raised cold-heading wire rod by CNY 50/t while keeping other wire rod prices unchanged.

2.2 Supply and Demand Dynamics

Supply continued to rise. Total output of the five major steel products reached 8.6802 million tonnes, up 109,700 tonnes (+1.3%) week-on-week. Daily hot metal output climbed to 2.4224 million tonnes, and blast furnace operating rates held at 84.25%. Mills have not yet shown a willingness to actively cut production, even as profitability remains depressed at only 55.84% — essentially flat week-on-week.

Demand showed a technical rebound. Apparent consumption of the five products rose 3.1% to 8.71 million tonnes, recovering from the prior week’s dip. Rebar apparent consumption jumped 6.5% to 2.208 million tonnes, partly reflecting the lifting of the Gaokao exam restrictions. However, this recovery is from a low base, and the underlying trend remains seasonally weak.

Inventories turned down again. According to Gangyin E-commerce, total steel inventories across the country fell by 120,000 tonnes (-1.23%) to 9.6497 million tonnes as of June 22. The structure showed social inventories declining while mill inventories edged up — reflecting that mills are shipping to the market but downstream absorption is not keeping pace.

2.3 Cost Drivers: Coke’s Eighth Hike Lands, Iron Ore Retreats

The standout development on the cost side was the eighth round of coke price hikes, implemented at midnight on June 22. Wet-quenched coke rose by CNY 50/t and dry-quenched by CNY 55/t, bringing the cumulative increase since late May to CNY 400/t and CNY 440/t respectively. Coking coal supply remains tight due to ongoing safety inspections in Shanxi, though utilization rates at 523 coking coal mines edged up 1.6 percentage points to 71.2%, suggesting the supply squeeze may ease gradually.

Iron ore provided a partial offset. The Mysteel 61% Fe forward index fell to $98.9/dmt, down $2.05/t week-on-week. Port inventories continued to accumulate slightly, reaching 173.11 million tonnes. Mills are buying on a hand-to-mouth basis, and the downward trend in ore prices is cushioning the impact of rising coke costs.

Nevertheless, steel mill margins remain extremely thin. Rebar immediate profit is approximately -CNY 70/t, and profit on a cost-lag basis is around -CNY 102/t. The integrated cost of hot metal production rose 0.81% to CNY 2,360/t (excluding tax). The cost floor is moving up, and steel prices are not following — a classic margin squeeze.

3. Geopolitics and Logistics: Strait of Hormuz Closed — Highest Priority Alert

3.1 Core Facts (A-Level Sources)

On June 19, the Iranian Armed Forces issued a formal statement closing the Strait of Hormuz in response to continued Israeli strikes on Lebanon. By June 21, maritime navigation data confirmed zero vessel transits. The IRGC Navy has stated it will not issue passage permits to any vessels until further notice.

On June 21, the first round of US-Iran negotiations was held in Bürgenstock, Switzerland, mediated by Pakistan and Qatar. Discussions focused on implementing Article 13 of the Memorandum of Understanding and prioritizing Lebanon-related issues. The US team indicated progress on Hormuz passage, while the Iranian side claimed a draft exemption for oil sanctions has been finalized. Yet the Strait remains shut as of this report.

3.2 Impact on Steel Trade

For procurement and sales managers, the implications are immediate: all orders for eastern Gulf ports must be rerouted or suspended. Jeddah remains the only viable access point for Saudi Arabia, but at a significantly higher cost. The first round of negotiations has not yet yielded a breakthrough on reopening, so the situation must be managed as an active disruption.

4. International Markets: Diverging Fortunes

Southeast Asia: Vietnam’s construction demand is hampered by the rainy season. Import prices for Japanese/Korean/Taiwanese HRC CFR Vietnam were assessed at $600/t, flat week-on-week. The East Asian scrap market continues to be weighed down by weak Vietnamese buying interest.

India: Domestic steel prices remain under pressure from seasonal demand weakness, high inventories, and elevated iron ore and coking coal costs. Rebar prices have fallen approximately INR 7,000/t (~$81/t) or 11% from April peaks, while HRC has been more resilient, down only INR 1,600/t (2%–3%). Major mills held June list prices steady.

Middle East (GCC): The UAE rebar market saw prices rise to AED 2,750/t ex-works, up AED 325/t (~$90) since early February. Spot availability in Dubai is tight, with some construction projects halted due to material shortages. The Hormuz closure adds an acute supply risk to an already strained market.

Europe: The summer lull is setting in. NW European HRC ex-works held at €692.50/t (~$801/t). German CRC rose to €785/t, while Italian plate softened to €730–750/t. Market activity is slow ahead of the July 1 safeguard implementation.

United States: HRC supply is extremely tight. Spot prices averaged $1,060/short ton, up $10 week-on-week. World Steel Dynamics expects prices to approach $1,150/short ton soon. The 50% import tariff combined with AD/CVD cases is creating a near-closed market, sustaining elevated domestic prices.

Northeast Asia: Japan’s AD probe into cold-rolled and hot-rolled flat products from China, South Korea, and Taiwan is underway. South Korea’s provisional anti-dumping duty on Chinese galvanized cold-rolled steel took effect June 12. These coordinated trade actions are creating a formidable barrier for Chinese cold-rolled and coated product exports to the region.

5. Trade Policy and Compliance Flashpoints

EU CBAM Expansion: On June 12, the EU Council agreed to extend CBAM to nearly 400 additional steel and aluminum products. The Q1 2026 CBAM certificate price stands at €75.36/t (~CNY 600/t), approximately seven times the domestic Chinese carbon price of ~CNY 80/t. Importers of steel into Europe must immediately verify the EPD certification status of their suppliers; uncertified mills face a default carbon cost surcharge that can reach €56/t for HRC.

EU Safeguard Quota Cut (July 1): The new regulation slashes tariff-free quotas by 47% to 18.3 million tonnes, with out-of-quota tariffs doubling to 50%. All exporters with EU contracts should prioritize clearing goods before June 30 to utilize current quota allocations.

China Export Dynamics: China’s steel exports surged 8.9% month-on-month to 10.34 million tonnes in May, as mills aggressively push volumes overseas to offset weak domestic demand. This is putting additional strain on trade relationships and inviting more anti-dumping actions from importing countries.

US-China Trade: The Chinese Ambassador to the US indicated that the two sides are negotiating a $30 billion reciprocal tariff reduction arrangement, providing some hope for a more stable trade framework.

6. Macro and Industry Policy

China’s industrial value-added grew 5.4% year-on-year in January–May, while infrastructure investment edged up only 0.6%. Crude steel output in May reached 84.36 million tonnes, up 0.9% month-on-month, though cumulative output for January–May was still down 3.7% year-on-year. The government is accelerating equipment renewal and consumer goods trade-in programs, with all CNY 200 billion in equipment renewal projects to be announced by end-June.

The China Iron and Steel Association, together with 40 industry bodies, issued a joint initiative against below-cost dumping and predatory competition, advocating for the normalization of steel export order. Meanwhile, five central ministries launched a three-year campaign to accelerate energy-saving and carbon-reduction retrofits in key industries, setting a target for 20% more capacity to meet benchmark efficiency levels by 2028.

Globally, the Federal Reserve’s June FOMC meeting struck a hawkish tone, with Deutsche Bank forecasting two additional rate hikes in 2026, potentially pushing the federal funds rate to 4.1%. Global steel demand growth for 2026 has been revised down from approximately 1.3% to 0.3%.

7. Key Variables and Uncertainties

• Ninth round of coke price hikes: Market expectations exist for a ninth increase, but the recovery in coking coal supply (mine utilization +1.6pp week-on-week) may cap further upside. No formal proposal from major coking plants has been confirmed yet.
• Hormuz reopening timeline: The first round of US-Iran talks has concluded without a reopening commitment. The timeline remains highly uncertain and dependent on fragile political dynamics.
• Tangshan production curbs: Unverified historical reports of Tangshan environmental restrictions were noted; these have not been confirmed and are not incorporated into the analysis.
• Brazilian iron ore exports: A new shipment route from Piauí state (northeastern Brazil) to China is being prepared, with an initial cargo of over 110,000 tonnes expected in the coming weeks — a potential incremental supply source to monitor.

8. Dual-Perspective Actionable Recommendations

🔴 For Procurement Managers

🔵 For Export Sales Managers

Disclaimer: This report is based on publicly available market information and professional analysis as of June 22, 2026. All data and judgments are subject to change. This does not constitute specific investment or trading advice.

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

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