On April 29, the China Iron and Steel Association held a press conference, stating that in the first quarter, China's economy continued its steady and positive trend, with GDP growing 5.0% year-on-year, a 0.5 percentage point acceleration compared to the previous quarter. The advantages of stable industrial and supply chains, along with strong supporting capabilities, provided a favorable macroeconomic environment for the stable operation of the steel industry. However, external instability and uncertainties have significantly increased, with the spillover effects of geopolitical conflicts profoundly impacting changes in the steel industry chain. Numerous longstanding issues and new challenges persist in domestic economic development and transformation. The imbalance between strong supply and weak demand in the steel industry still needs resolution, the foundation for quality improvement and efficiency gains requires consolidation, and risks from external changes remain to be addressed.
Rising external uncertainties are affecting the operation of the steel industry chain.
From a global economic perspective, the Middle East situation is posing a new round of shocks to the global economy, casting growth prospects into a state of high uncertainty. The International Monetary Fund's latest April report lowered this year's global growth forecast by 0.2 percentage points to 3.1%, while raising the global inflation rate expectation to 4.4%. The Organisation for Economic Co-operation and Development's latest economic outlook report reduced this year's global growth rate to 2.9%, predicting that if energy prices surge further, significant impacts on economic growth and inflation would occur.
Regarding downstream demand, the World Steel Association expects prolonged Middle East conflicts to cause a sharp decline in steel demand in the region this year, while substantially revising down global steel demand growth for 2026 by 1 percentage point to 0.3%. For upstream raw materials and fuels, iron ore market prices showed a V-shaped trend in the first quarter, rapidly rising above $100 per ton in late February, creating a price scissors gap with steel products. Although the fundamental supply-demand dynamics of the iron ore market haven't changed, Middle East tensions have driven up oil prices, increasing mining costs and freight expenses while boosting inflation expectations. Despite iron ore port inventories reaching a record high of 170 million tons in April, import iron ore prices continue to fluctuate at elevated levels of $105-$110 per ton. Similarly, prices of coking coal, coke, ferroalloys, and scrap steel remain high due to these influences, intensifying cost pressures for steel enterprises.