Current Operational Status of Core Steel Raw Materials (Mid-2026)

(I) Finished Steel: Significant inventory accumulation during the off-season; prices fluctuate weakly while seeking a bottom

As the high-temperature, rainy season of mid-summer (July) set in, the pace of outdoor infrastructure and real estate construction slowed drastically, causing terminal demand for steel to hit a seasonal low. According to the latest monitoring data from Mysteel, total inventory across the five major steel product categories reached 16.2941 million tonnes—an increase of 2.9289 million tonnes year-on-year—marking a trend of continuous inventory accumulation over several weeks.

(II) Upstream Raw Materials: Divergent trends across four major categories; cost floors remain firm

1. Iron Ore: Minor, short-term rebound; limited upside potential

Overall port inventories of iron ore remain high, with ample overseas shipments. Price increases were merely sporadic and minor, driven by short-term shipping schedule disruptions and low-level restocking by steel mills; the market lacks fundamental support for sustained strength. Consequently, the annual price center remains weak, offering limited support for steel mill costs.

2. Coke/Coking Coal: Rigid costs exert the greatest pressure on profitability

Coking coal supplies remain tight due to safety regulations at mines and capacity constraints. Although steel mills successfully implemented the first round of coke price cuts, overall prices remain at relatively high levels for the year. Sustained high costs for coal and coke in integrated steel mills (blast furnace-basic oxygen furnace route) have forced increased blast furnace maintenance and production cuts, serving as the primary driver behind the current contraction in steel enterprise profits.

3. Zinc Ingots (Core auxiliary material for hot-dip galvanizing): Price fluctuations directly impact anti-corrosion processing costs

Products such as hot-dip galvanized fence and "358" anti-climb mesh rely on hot-dip galvanizing for corrosion protection, making zinc ingots the second-largest cost variable. Zinc prices fluctuate in line with broader commodity market sentiment; these fluctuations directly determine galvanizing processing fees, meaning even minor changes in raw material costs can impact the ex-factory pricing of finished products.