Steel Prices in China Easing on Weaker Demand After Steep Hike in September

The high prices of steel have hit Indian solar EPC players and module manufacturers


Steel prices in China are returning to normal after a steep spike in September, which saw prices reach a high of almost CNY 6,000 (~$939)/ton, according to a report by Raymond James and Associates.

China is right at the heart of the global steel market, accounting for nearly 56% of the global output. The country’s steel demand is also roughly half of the global demand. Chinese steel demand has plummeted to the lowest level since February 2020, when the Covid-19 pandemic started.

China Steel Prices

Steel Rebar is mainly traded on the Shanghai Futures Exchange and London Metal Exchange. The standard future contract is 10 tons. The biggest producer of crude steel is China, followed by European Union, Japan, the United States, India, Russia, and South Korea. The steel prices displayed in Trading Economics are based on over-the-counter (OTC) and contract for difference (CFD) financial instruments.

According to Trading Economics, Shanghai steel futures fell further to CNY 4,800 (~$751)/ton in October, the lowest since June 23 and roughly a 19% drop from the record-high of CNY 5,975 (~$935)/ton traded on May 11, as investors continued their selling on worries over slumping steel demand in China. The demand from the manufacturing industry slowed sharply due to power rationing and as car production declined due to chips shortages and lower demand.

According to Trading Economics global macro models and analysts’ expectations, steel is expected to trade at CNY 5167.21 (~$808)/ton by the end of this quarter and at CNY 5522.51 (~$864)/ton in 12 months’ time.

The weaker demand for steel is canceling out the curtailed supply, and the 20% increase now is comparatively better from the 40% increase in steel prices just one month ago.

The increase in steel prices is also affecting the solar sector. However, the use of steel in the solar industry is a miniscule component of the global steel market, which touched 1.9 billion tons at the end of 2020. Even for hot-rolled coil steel —most commonly used in the production of trackers — solar is a minor source of demand. But the impact is being felt nonetheless.

But things have now started to settle down, and the prices have rolled over, providing much relief to the industrial sector, as it has brought down the cost of goods. But many believe that it is too early to predict that the prices will settle down to the pre-inflationary levels of 2019-2020, the report by the financial services firm said.

While the demand for steel has gone down drastically in China, the demand has grown worldwide, and it is an excellent opportunity for other nations to fill in the void created by China, the report said.

Due to China’s decision to cut down production and export of steel, prices have gone up in India also. Currently, the price in India is around ₹60,000 (~$799)/ton.

According to, steel futures in India dropped to ₹47,200 (~$629)/ton, a significant drop from the high of ₹49,400 (~$657.9)/ton on October 19. Since the end of September, prices have been around ₹47,000 (~$625.9)/ton, marking an increase of nearly 66% compared to last year. From October 10, steel futures had been trading around ₹49,000 (~$653).

Earlier, Mercom had discussed how manufacturers of mounting structures for solar modules were facing a severe shortage in steel, a critical raw material. The price volatility of this essential metal and supply disruptions have created a challenge for the manufacturers to supply the mounting structures to solar projects within the scheduled timeline.

In June, steel prices in India were being quoted at ₹36,000 (~$490)/ton, a 25% increase over the price two months earlier. Since early this year, the spike in steel prices has exacerbated the situation for engineering, procurement, and construction players and module manufacturers in the solar space.


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