China's steel production is expected to rebound as seasonal demand from end-users will begin to pick up in September. In late August, northern steel mills reduced production capacity in compliance with the authorities' measures, resulting in a temporary drop in output.

Market participants said that while restocking demand will support the price trend, an upward trend may be limited if the mills expand production. 

Steel inventories have been lower than last year's level since February. As of the end of August, available inventory in China's major spot markets stood at approximately 23.81 million tons, up by 5.2% from the end of July and comparable to the same period last year. 

At present, market pressure in September is minimal as exports remain strong, and most mills have received sufficient orders, particularly for hot-rolled coil and cold-rolled coil.