China’s manufacturing production and steel demand remained healthy in August 2025, supporting flat-rolled steel prices and volumes. However, seasonal demand recovery in September has been weak, prompting a cautious outlook on steel demand growth in the coming months.

Despite rising inventories, flat steel production has stayed high so far in September. Without new policy support this month or next, the market could face pressure in October. In August, output in machinery, automotive, home appliances, shipbuilding, and power equipment increased year-on-year, while railway facilities and container production declined.

Steelmakers expect strong demand in shipbuilding, new energy equipment, and construction machinery through 2025 and 2026. Ship completions in 2025 are projected at 51 million DWT, increasing by 5.9% compared to 2024. Steel demand for construction machinery has performed well this year and is expected to continue into next year. This growth is driven by a three-year-old domestic machinery replacement cycle and strong export markets, rather than a construction industry recovery.

In the automotive and home appliance sectors, industry sources warn that domestic passenger vehicle sales in the fourth quarter could decline sharply year-on-year, because of exceptionally strong sales in the same quarter of 2024, driven by government subsidies. Steelmakers reported that September orders from these sectors fell from August and last year, reflecting cautious expectations for end-user demand in the coming months.