China Steel Sector "Ferrous rebalancing underway; met coal near-term peak,..."

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China Steel Sector "Ferrous rebalancing underway; met coal near-term peak,..."

Global Research

21 July 2026ab

China Steel Sector Equities

ChinaFerrous rebalancing underway; met coal near-

term peak, steel margins to recover Steel

Sharon Ding

Analyst

sharon.ding@ubs.com

Met coal peaks near Rmb2,000/t; mills slip into losses, coke cuts begin +852-2971 6284

Met coal: since the 22 May Qinyuan accident, LS primary coking coal prices have Elvis Liu

risen 26% (+Rmb410/t), peaking at Rmb1,995/t on 29 Jun before easing to Associate Analyst

~Rmb1,960/t (in line with earlier discussions of a Rmb1,900-2,000/t trading elvis.liu@ubs.com

range, with strong resistance at Rmb2,000/t, Figure 1Metcoalpricetrends). From 22 May to 17 Jul, +852-3712 3052

raw/refined met coal output fell 18mt/8mt YoY (~53% of UBS 26e reduction, in Myles Allsop

line). Shanxi inspections remain strict, with 73 mines (raw coal 75mtpa) still offline Analyst

as of 15 Jul, although two Qinyuan mines (2.1mtpa) have resumed production. We myles.allsop@ubs.com

continue to expect China refined met coal output declines to moderate from 7% +44-20-7568 1693

YoY in Jul-Aug to 3% in Sep-Nov. Andrew Jones

Analyst Steel: mills absorbed most coal inflation during May-Jun, but falling steel prices

andrew-i.jones@ubs.com

and elevated coal costs have pushed nationwide margins into losses. Rebar/HRC

+44-20-7901 6545

spreads have narrowed by Rmb160/t / Rmb150/t, implying losses of Rmb10-40/t

(Figure 6Rebarspreadslipedintoloses). Mysteel's profitable-mill ratio has fallen from 63% to 40% (Figure 7Profitable-milratiofelto40%). Lachlan Shaw

Analyst Northern and Eastern mills have announced Jul-Aug maintenance plans. We

lachlan.shaw@ubs.com

expect pig iron output to decline from the late-Jun peak of 2.43mt/d to 2.35- +61-3-9242 6387