Analysis of the reasons for the fall of global steel prices in March 2025:

Since March 2025, the global steel market price has continued to fall, and the decline is obvious. 

The benchmark price of major domestic steel varieties has fallen to 3,200 yuan per ton, a sharp drop of 28% compared with the same period in 2024, setting a new low in price. According to industry predictions, this wave of decline is likely to continue until the end of the second quarter. 

Only when the growth rate of new construction area of real estate turns positive and the funding rate of infrastructure projects exceeds 75%, the market is expected to stabilize. 

Goldman Sachs predicts that the average global steel price in 2025 will drop by another 8% compared with 2024. 

However, if Chinese steel companies can achieve breakthroughs in low-carbon technologies and other fields, they may usher in growth opportunities after 2026. 

We can analyze it from the following aspects:

I. Core factors:

1. Collapse of the cost factor

- Iron ore futures prices fell to $82/ton (-23% from the beginning of the year), breaking through the cost line of most mines in the world, but did not ease the pressure on steel companies, but instead triggered panic selling.

- The prices of raw materials such as coking coal are approaching the cost lower limit, further compressing the profit margins of steel companies, and the industry's losses have expanded to 45%.

2. The imbalance between supply and demand

- Oversupply: social inventory reached 19.8 million tons (year-on-year +34%), the backlog of rebar was particularly serious, and the capacity digestion cycle was extended.

- Weak demand:

1)Real estate investment has been negative for 12 consecutive months, the newly started area has continued to shrink, and the gap in traditional steel demand has reached a historical peak;

2)The proportion of steel used in emerging fields such as new energy/infrastructure is less than 15%, which is difficult to hedge the decline in traditional demand;

3)Exports are blocked: international steel prices fell to $320/ton (year-on-year -18%), and China's export volume and price have both fallen.

3.Policy coordination dilemma

- The Ministry of Industry and Information Technology has encountered obstacles in implementing the "production based on sales" policy. Local governments have acquiesced to overproduction to ensure tax revenue and employment. The actual output in January and February exceeded the plan by 12%.

- Controversy over special loans from the Ministry of Finance: The market is worried that funds will flow to inefficient production capacity, exacerbating the contradictions in the industry structure.

- Carbon emission cost pressure: The environmental protection cost of traditional steel mills has increased by 80-120 yuan per ton of steel, and enterprises with lagging technology upgrades have accelerated their exit.

II. Market structure:

1. Accelerated industry reshuffle

- Two private steel companies went bankrupt in March, and the survival rate of companies with a production capacity of less than 2 million tons was less than 40%, and the market share of leading companies increased to 58%.

- Technological differentiation: The premium of hydrogen metallurgical products reached 15%-20%, and the utilization rate of recycled steel raw materials exceeded 22% (compared with 2024 +7%).

2. Failure of price transmission mechanism

- Downstream procurement showed the characteristics of "low price volume and stagnant price increase", indicating that the elasticity of terminal demand is close to exhaustion.

- Traders dumped goods, exacerbating the price spiral, but supported by raw material costs, the decline in steel prices narrowed to an average of 2-3% per month.

III. Future trends：

1. Short-term pressure continues

- Goldman Sachs predicts that the average price will drop by another 8% in 2025, and the current stage bottom may be reached at the end of the second quarter (need to meet: new real estate construction turns positive + infrastructure funding rate>75%).

- Iron ore prices may bottom out at US$80/ton, but the tightening supply of coking coal may cause marginal cost increases.

2. Structural opportunities

- Low-carbon transformation window: If Chinese steel companies break through technologies such as hydrogen metallurgy and electric furnace short process, the cost of a ton of steel can be reduced by 200-300 yuan in 2026.

- Global green premium expansion: The implementation of EU carbon tariffs may generate 20 million tons/year of high-end steel substitution demand.

Conclusion:

The current steel market is in a period of triple pressure of "cost collapse-demand contraction-policy game". The industry needs to break the dilemma through "capacity clearance (50 million tons of obsolete capacity may be eliminated in the next 12 months) + technological leap (low-carbon investment must reach more than 5% of industry revenue)". 

There may be a recovery in the second half of 2025, but a substantial rebound needs to wait for the signal of a warming global manufacturing cycle.