Weekend Market Update: Steel Loses Further Ground, Coke Price Cut Lands, BDI Tumbles, and Hormuz Tensions Spike Again

Report Period: May 29 (Friday) – June 1 (Monday), 2026

1. Core Judgment: Off-Season Weakness Deepens, Cost Support Erodes as Coke Cut Takes Hold

China’s steel market extended its decline over the weekend, with weak end-user demand and loosening raw material costs creating a double drag. The long-awaited coke price cut has materialized, removing a key pillar of the cost floor that had supported steel prices through April and early May. Meanwhile, the Middle East remains on a knife-edge, with the US and Iran trading threats and the Strait of Hormuz still effectively disrupted. The BDI has slumped to its lowest since late March, reflecting a broader slowdown in dry bulk demand just as geopolitical risk premiums on key shipping routes are flaring up again.

The combination of softening fundamentals and elevated geopolitical uncertainty means procurement managers must now balance falling input costs against the risk of sudden logistics shocks, while export sales managers face a market where price competitiveness is improving but demand remains patchy and route-specific risk is extreme.

Trend judgment: Short-term steel prices will remain under pressure, with a modest downside bias. The coke price cut opens room for further steel price weakness, but iron ore is proving stickier than expected. Watch for any Hormuz-triggered oil or freight spike that could rapidly alter the cost calculus.

2. China Domestic Market: Demand Stays Depressed, Tangshan Billet Drifts Lower

2.1 Weekend Price Moves

According to Mysteel’s weekend briefing, China’s spot steel market remained subdued. Construction steel demand continued to be hampered by heavy rainfall across southern and eastern China. Transactions in major trading hubs were thin.

Tangshan billet, a bellwether for domestic sentiment, slipped further. On Saturday May 30, the ex-works price of Q235 plain carbon billet in Qian’an was reported at CNY 3,020/t, down CNY 20 from the prior week’s level of CNY 3,040/t. By Sunday evening, some traders were offering spot billet at CNY 3,080–3,090/t including tax, suggesting a continued weak bias.

Rebar prices in key markets drifted lower:

• Shanghai: HRB400 20mm rebar traded around CNY 3,240–3,260/t, down CNY 20–40/t w/w.
• Beijing: rebar at CNY 3,210–3,230/t, down CNY 40/t w/w.
• Guangzhou: rebar at CNY 3,380–3,400/t, down CNY 30/t w/w.

Hot-rolled coil continued to soften. Mainstream Q235 5.75mm HRC in Shanghai was quoted at CNY 3,280–3,300/t, down about CNY 50/t from the previous weekend. Cold-rolled coil and HDG held relatively firm, but trading volumes were thin.

2.2 Demand and Inventory

Demand indicators pointed to further seasonal weakening. Average daily construction steel trading volume, based on Mysteel’s sample of 237 traders, averaged around 125,000–135,000 tonnes over the past week, down from 150,000+ tonnes in late April. Southern China continued to be hit by torrential rain, while the Yangtze River Delta saw on-and-off showers that disrupted outdoor construction.

Steel inventories are still destocking, but the pace has slowed. Total stocks of the five major products were likely down by around 350,000–450,000 tonnes last week, compared with declines of 700,000+ tonnes earlier in May. Mill inventories are beginning to edge up, signaling that the supply-demand balance is tilting.

2.3 Macro Data and Sentiment

China’s official Manufacturing PMI for May, released on Sunday May 31, came in at 49.6 (source: National Bureau of Statistics), slightly below the 50-point threshold and down from 50.1 in April. The new export orders sub-index remained in contraction, reflecting the headwinds from trade barriers. This reading reinforced the picture of an economy losing momentum, weighing on market sentiment.

The Caixin Manufacturing PMI, which focuses more on small and medium-sized firms, will be released later this week and is also expected to show weakness.

3. Raw Materials: Coke Cut Confirmed, Iron Ore Stubborn, Scrap Tumbles

The biggest story this weekend was the formal landing of coke price cuts, which marks a turning point in the cost-support narrative.

3.1 Coke: First Round of Price Cuts Implemented

After weeks of stalemate, major steel mills in Hebei and Shandong accepted the first round of coke price cuts on May 29–30. The reduction of CNY 50–55/t (wet-quenched) has been implemented, bringing port prices lower. As of June 1, trade-level quotes for Grade 1 wet-quenched coke at Rizhao port were around CNY 1,480–1,500/t, down from CNY 1,530–1,550/t the prior week. Dry-quenched coke also fell proportionally.

The cut was driven by improving coke supply (coking plants operating at high rates and rebuilding inventories) and weakening demand from steel mills, which are seeing their own margins squeezed by falling steel prices. A second round of cuts is already being discussed by mills, and could emerge within the next 7–10 days if the steel market remains weak.

For procurement managers, this is a clear signal that the cost floor is shifting downward. Steel mills that had been holding out for lower coke prices have now gained validation, and their own input costs are falling — which will put further downward pressure on steel product prices.

3.2 Iron Ore: Sticky at the Low End

Iron ore remained surprisingly resilient over the weekend. On Friday May 29, the Platts 62% Fe index was assessed at $96.85/dmt CFR China, down about $1.50 from the prior Friday. However, by Monday morning, the DCE iron ore futures had edged higher in early trading, suggesting that the market is not yet ready for a sharp breakdown.

Port inventories are still high (around 164–166 million tonnes), but hot metal output has not collapsed — daily hot metal production among 247 mills was still around 2.37–2.38 million tonnes last week. This is providing a floor for iron ore, at least for now. Domestic concentrate prices held steady, with Tangshan 66% fines at CNY 975–980/t.

The iron ore market is thus in a tug-of-war: high inventories and weak steel demand argue for lower prices, while still-decent mill consumption and seasonal supply disruptions from Australia (cyclone season winding down) limit the downside. We expect iron ore to trade in a $94–$99/t range for the near term, with any break below $94 requiring a clear drop in hot metal output.

3.3 Scrap: Accelerating Decline

Scrap steel prices fell sharply over the weekend. On May 30–31, at least 35 steel mills across China announced scrap purchase price cuts of CNY 30–60/t. The wave of cuts was broad-based, from Jiangsu to Hebei to Sichuan. With electric arc furnace (EAF) mills now facing negative or near-zero margins on rebar, and hot metal cheaper than scrap in most regions, mills have strong incentives to reduce scrap intake. EAF operating rates fell to around 52% last week, down from 58% in early May. This is bearish for scrap but highlights the broader demand weakness.

4. Global Shipping: BDI Falls to 3-Month Low, Hormuz Risk Remains Extreme

4.1 Baltic Dry Index

The BDI continued its slide, closing at 2,850 on Friday May 29, down 4.7% from the prior week’s 2,991 and hitting its lowest level since late February/early March. The Capesize index fell to 4,580, down 7.5% w/w, as iron ore and coal shipping demand softened. Average Capesize daily earnings dropped to around $38,500/day, from $41,400 the week before. Panamax and Supramax rates also weakened, with the Panamax index losing 3.2% to 2,152.

The decline reflects a genuine softening in bulk commodity demand — Chinese iron ore restocking has paused, coal shipments are seasonally slower, and grain season in the Atlantic has not yet kicked in. However, the BDI remains above the 2,500-point level that prevailed in February, indicating that the shipping market has not collapsed.

4.2 Strait of Hormuz & Red Sea: Tensions Spike Again

Over the weekend, the geopolitical temperature around the Strait of Hormuz rose sharply:

• On May 30, Iranian state media reported that the Islamic Revolutionary Guard Corps had conducted new naval exercises in the strait, including the firing of coastal defense missiles. The US 5th Fleet issued a statement calling the exercises “provocative” and warning commercial vessels to exercise extreme caution.
• On May 31, a Houthi spokesman claimed responsibility for an attack on a bulk carrier transiting the southern Red Sea. The vessel was reportedly damaged but able to continue. This is the fifth attack on commercial shipping in the Red Sea in the past two weeks.
• War risk insurance premiums for vessels entering the Persian Gulf rose again, with brokers quoting 4.5–8% of hull value, up from 3–7.5% a week earlier.
• Oil prices jumped in early Asian trading on Monday June 1, with Brent crude pushing back above $99/bbl.

For steel trade logistics, the practical impact is severe and persistent. Maersk, MSC, and CMA CGM continue to avoid direct calls at Dammam, Jubail, and most UAE ports, relying instead on feeder services from Sohar and Salalah or on Jeddah for Saudi destinations. Red Sea transits for non-essential cargo are increasingly difficult, with many ships still opting for the Cape of Good Hope route, adding 10–14 days and 15–20% to voyage costs.

For procurement managers with Middle East sourcing, the delivered cost of imported steel has become highly unpredictable. For export sales managers, Middle East CFR quotes must now embed an explicit war risk surcharge clause — we recommend at least $45–75/tonne, depending on the destination — and clearly allocate responsibility for any further increases.

5. International Steel Markets

5.1 China Export Market: HRC FOB Slips, Billet Holds

China’s HRC export offer weakened marginally. On Friday May 29, mainstream FOB offers for SS400 HRC were at $505–510/t FOB Tianjin/Jingtang, down $5 from the prior week. Traders reported limited buying interest, as overseas customers remain cautious amid falling prices. Medium plate FOB offers were around $545/t, also down $3–5/t.

Billet exports, however, remained relatively firm. FOB offers for Chinese 3SP 150mm billet were in the $485–490/t range, supported by persistent demand from ASEAN and the Middle East. Several deals were reported to Vietnam and the Philippines at $488–492/t CFR, suggesting that the billet market is tighter than the HRC market — consistent with the structural shift towards slab/billet exports we have been highlighting.

5.2 India: Bearish Sentiment Prevails

India’s domestic steel market remained under pressure. The induction furnace billet index fell to INR 40,200–40,500/t ex-works, down INR 300–500/t w/w. Hot-rolled coil prices were also lower, with domestic offers around INR 50,500–51,000/t. Export offers for Indian SAE1006 HRC to Vietnam slipped to $570–580/t CFR, but there were few takers given the downward price trend and the upcoming monsoon season in India, which typically dampens construction demand.

5.3 Middle East: Supply Gap Widens, But Logistics Are Crippling

The Iranian export ban on steel products has been extended beyond May 30, according to trade sources, as the nuclear standoff continues. This is keeping a floor under Middle East flat product prices, with CFR offers for HRC (non-Iranian) holding at $515–530/t. However, the extreme difficulty and cost of shipping into the Gulf means that actual landed costs are far higher than these CFR quotes suggest. Many buyers are postponing purchases or seeking alternative origins.

5.4 Southeast Asia: Vietnamese Demand Stable, But Price War Rages

Vietnam’s steel demand is holding up, driven by infrastructure projects. However, the market is oversupplied with aggressive offers from India, China, and Russia. Indian HRC at $570–580/t CFR remains the most competitive, while Chinese HRC at $520–525/t CFR is losing share. Vietnamese domestic mills are also cutting prices to compete, with Formosa Ha Tinh reducing its June-delivery HRC base price by $15–20/t.

5.5 Europe: CBAM Bites, Demand Muted

European steel prices edged lower, with HRC in NW Europe at €610–620/t delivered, down €10/t. The CBAM carbon price remains at €76/t, adding to the cost of imported steel. Combined with safeguard quota cuts from July, the EU is becoming an increasingly closed market for Chinese exports. Only high-value, low-carbon steel with EPD certification has a viable pathway.

6. Trade Policy and Geopolitical Flashpoints

• The US Department of Commerce announced on May 29 that it will initiate a Section 232 national security investigation into imports of steel pipe from China and India. This could lead to new tariffs or quotas.
• The EU’s safeguard review is ongoing, with a final decision on quota reductions expected in June. The proposed cut to 18.3 million tonnes of tariff-free imports would represent a severe blow to global steel trade flows.
• China’s export licensing regime continues to filter out low-value-added shipments. Data for May, expected in early June, is likely to show a further year-on-year decline in total steel exports, though high-value product exports (galvanized, electrical steel) may hold up better.

7. Cross-Cutting Trends Summary

8. Actionable Recommendations

🔴 For Procurement Managers

🔵 For Export Sales Managers

⚡ Urgent Alert

The Strait of Hormuz situation has not de-escalated. War risk premiums are rising again, oil is pushing $100/bbl, and Red Sea attacks continue. For any export sales manager with an open contract to the Middle East: confirm the vessel’s current location, verify insurance coverage, and immediately communicate with your buyer about war risk surcharge cost sharing. For procurement managers, consider whether alternative sourcing from non-Middle East origins (e.g., ASEAN, Korea, Japan) can replace at-risk deliveries.

Disclaimer: This report is based on publicly available market information and professional analysis, for professional reference only, and does not constitute specific investment or trading advice. All data and judgments are based on market conditions as of June 1, 2026, and may change thereafter.

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

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