Factors affecting the medium- and long-term price trend of steel

At present, the global steel market fluctuates frequently and prices fluctuate. This unstable situation is mainly affected by factors such as macroeconomic fluctuations, industrial chain reconstruction and green transformation. According to data from February 2025, the social inventory of steel in major cities across the country has dropped to 12 million tons, a year-on-year decrease of 12%, and the supply and demand relationship is approaching balance. 

March is the traditional peak season for infrastructure construction, and China's "stable growth" policy has promoted the concentrated start of many infrastructure projects. Steel demand has increased by 5%-8% month-on-month in the short term. 

At the same time, iron ore prices have remained at a high level of US$120-130 per ton due to slow production recovery, and the environmental protection production restriction policy has caused the price of coke to rise to more than 2,800 yuan per ton. 

These factors have jointly led to a volatile upward trend in steel prices. However, the recovery of the real estate market is less than expected. 

In 2024, China's real estate development investment growth rate will be less than 2%, and the newly started area will continue to decrease, limiting the continued rise in steel prices.

1. Adjustment of the global industrial chain changes the supply and demand pattern

Developed countries are implementing the "re-industrialization" strategy to stimulate the expansion of their own steel production capacity. 

For example, the United States plans to increase its steel demand by 5 million tons by 2025; the EU's implementation of carbon tariffs has increased the cost of imported steel, which may cause differences in steel prices in different regions. 

At the same time, the industrialization process in emerging markets such as Southeast Asia and India has accelerated, and the focus of global steel demand has gradually shifted to the East, profoundly changing the global steel supply and demand pattern.

2. China's supply-side reform continues to deepen

China's steel industry has entered a new stage of "reducing quantity and improving quality": 

First, crude steel production capacity is expected to be controlled within 1 billion tons in 2025, and capacity utilization will be increased to 85%; 

Second, the proportion of electric furnace steel is expected to be increased to 20%, and the dependence on iron ore will be reduced by promoting short-process steelmaking; 

Third, the completion rate of ultra-low emission transformation exceeds 90%, and the cost of each ton of steel increases by 100-150 yuan. 

These measures not only affect the domestic steel market, but also play an important role in the global steel industry pattern.

3. Green transformation promotes industrial upgrading

Against the backdrop of the global pursuit of carbon neutrality, technological change in the steel industry is accelerating. 

Hydrogen steelmaking technology has entered the commercial pilot stage. 

In 2025, the cost of low-carbon steel may be 10% - 15% higher than that of ordinary steel; the EU carbon price has exceeded 100 euros/ton, and the export competitiveness of high-carbon steel has been continuously weakened; the import policy of recycled steel raw materials has been relaxed, and the proportion of scrap steel has been increased to more than 30%, which has effectively reduced the impact of iron ore price fluctuations.

Of course, everything has two sides. Potential risks include geopolitical conflicts and global economic recession, which may lead to large fluctuations in prices and demand. 

If the breakthrough of low-carbon technology is slower than expected, it will also have an adverse impact on the steel market.

4. Conclusion

Overall, the steel market in 2025 is at the intersection of the traditional market cycle and green transformation. 

In the long run, technological change and technological innovation are key factors affecting the trend of steel prices. 

Only by deeply understanding the logic of industrial development and implementing the "dual carbon" development goals can we seize opportunities and stand out in complex price fluctuations.