[SMM Analysis] Anti-Dumping Investigation Arrived China's Grain-Oriented Silicon Steel Exports Encountered Major Changes

[SMM Analysis] China's Grain-Oriented Silicon Steel Export Competitiveness Continues to Strengthen, Import Substitution Progress Continues to Advance

[SMM Steel] Austrian steelmaker voestalpine finalized expansion plans for its greentec steel program, targeting a complete transition to electrified steel production at its Donawitz plant by 2030. The company will debut a new electric arc furnace (EAF) powered by green electricity in 2027, operating alongside traditional blast furnaces until decommissioning one unit in 2029. An approved EUR 100 million expansion budget will upgrade power systems, add a secondary metallurgy line, and improve scrap logistics by 2030, pending final funding approvals. This second stage will lift annual CO2-reduced steel capacity from 850000 tonnes in 2027 to 1.5 million tonnes by 2030, cutting site emissions by over 90% from 2019 levels. The transformation will close existing blast furnaces and the sinter plant, indirectly securing more than 5000 regional jobs. Core equipment installations begin in fall 2026.

HRC prices: Over the coming year, from 2026 to 2027, China has nearly 40 million mt of HRC capacity projects under planning and construction, with production expected to increase further in 2026. Demand side, China's macro policies are expected to remain accommodative, and the manufacturing sector is likely to continue introducing policies to stimulate consumption, with demand expectations staying resilient. However, affected by anti-dumping measures and export structure adjustments, the decline in HRC exports will weigh on the domestic high-supply pattern. Overall, HRC prices are expected to continue hovering at lows in 2026. But considering that overseas geopolitical conflicts are pushing up inflation expectations and transmitting to commodity prices, coupled with coal and coke prices hitting bottom in 2025 and entering a new recovery uptick cycle, against the backdrop of cost push, the average HRC price may rebound slightly compared to 2025. Looking ahead to the next five years, considering that the peak period of new production capacity has passed, with the accelerated promotion of industry mergers and reorganizations and the continuous optimization of the capacity structure, HRC supply growth is expected to gradually slow down and stabilize starting from 2027. SMM expects that around 2028, a policy package of supply-side production restrictions plus steel export scale tightening may re-emerge, and the improvement in the overcapacity contradiction may bring about a round of upside opportunities for HRC prices. However, unlike the intensity of the 2015 supply-side reforms that were coupled with real estate easing and shantytown renovation destocking policies, after the phased capacity removal ends, the overall downward trend in China's steel consumption will be hard to reverse, which will limit the upside room of this HRC price rally driven by supply-demand imbalance easing. Additionally, the supply-demand pattern of iron ore trending looser will also pull down costs, and HRC prices are expected to come under pressure again after a brief rise. Steel mill profits: Considering that China's surplus steel capacity is resolved through steel exports, this necessitates China's steel prices to stay relatively low to support price advantages and orders, which will also limit the upside room of China's steel prices, steel mill profits are expected to remain at low marginal levels in H2 2026. China Hot-Rolled Coil Annual Supply-Demand Balance （ The line chart represents China's HRC price, and the bar chart represents the HRC balance. ）

H1 Price Review: In H1 2026, China’s grain-oriented silicon steel market fluctuated overall, with prices first suppressed and then rebounding. At the start of the year, market prices edged down, but as downstream demand gradually recovered, prices saw a rebound. Performance diverged notably by product type: competition intensified for regular grades amid mediocre demand, keeping prices generally weak; high-end high-permeability grades, supported by rigid demand from power infrastructure, remained firm throughout. On the supply side, regular grades were in ample supply and competition intensified, while high-end products, limited by technological barriers, saw constrained capacity deployment and persistently tight supply. The demand side showed pronounced structural divergence, with ongoing UHV construction and power grid upgrades sustaining solid rigid demand for high-end products, whereas demand for regular grades remained weak. H1 Fundamentals Review: From a production perspective, the production schedule of grain-oriented silicon steel in China in H1 2026 followed a trend of rising, then falling, and then rising again. Only the January-February production schedule volume exceeded the level in the same period of 2025, while the schedule from March to June all fell short of the year-earlier level. In March, it dropped to the H1 low of about 171,000 mt, and in May-June, it recovered to around 183,000 mt as production arrangements were stepped up. However, the overall production schedule center was lower than in H1 2025, and Q2 saw a marked contraction in production activity. Over the same period, the capacity utilization rate trend was highly synchronized with the production schedule. In January-February, the utilization rate was slightly higher than last year, then declined continuously from March to April, hitting the H1 low of 74% in April, and rebounded to 76% in May-June as the schedule recovered. For each month of H1, the utilization rate was significantly lower than the same period in 2025, with the full-year range kept at 74%-81%. This diverging pattern—"slight strength at the start of the year and simultaneous weakening of production schedule and utilization rate in Q2"—indicates that downstream demand support in H1 was weaker than in 2025. Enterprises proactively lowered their Q2 production plans, and the pace of capacity commissioning slowed down. Even with moderate supplementary production in May and June, overall actual operating loads remained weaker than in the same period last year. From the perspective of grain-oriented silicon steel consumption driven by power grid installations, overall demand in H1 2026 (January-April) showed a gradual weakening trend, with monthly consumption declining step by step. January marked the H1 demand peak, with total consumption of approximately 150,000 mt, supported simultaneously by PV, thermal power, and wind power. In February, total demand pulled back slightly, with consumption contracting across all sub-sectors. March fell to the H1 trough, as total monthly consumption was under 80,000 mt, and PV and thermal power installation releases slowed markedly. April saw a slight recovery in demand, but the overall volume remained low. In terms of demand structure, solar, wind, and thermal power remained the core consumption sources in H1, together accounting for nearly 80% of consumption, with nuclear power providing a small supplement and hydropower contribution consistently low. In January, thermal power and PV provided strong boosts, while wind power, which saw concentrated year-end commissioning, had limited release in H1. PV, the largest demand segment, saw continuously declining consumption from January to April, becoming the primary factor dragging down H1 demand. Compared with the full year, overall installation demand in H1 (January-April) was far below the two peak season highs of last May and December. The release pace of new installations was weak, with insufficient commissioning increments across all power sources. Overall, the end-use demand for grain-oriented silicon steel exhibited market characteristics of underperforming in the peak season and coming under monthly pressure. H2 Outlook: In H1 2026, only the Phase II 80,000 mt HIB grade grain-oriented silicon steel capacity of Angang Longdu Electromagnetic New Materials in central China came on stream in Q2, with limited new capacity additions in H1. H2 will mark a concentrated period for GO silicon steel capacity commissioning, with enterprises across multiple regions gradually starting up capacity: in east China, Baoshan Iron & Steel Co., Ltd.'s 220,000 mt HIB grade GO silicon steel capacity will simultaneously commence production in H2, Zhejiang Jinlei Soft Magnetic Materials will start up 100,000 mt CGO grade GO silicon steel capacity in Q3, and Jiangsu Zhongsheng Electromagnetic Technology (180,000 mt HIB) and Jiangxi Chongxin New Materials (80,000 mt HIB) both plan to start production in Q4; in central China, Wuhan Iron & Steel Co., Ltd. plans to launch its 200,000 mt HIB grade GO silicon steel capacity in Q3. Looking ahead to H2, market divergence will persist. The industry’s capacity structure continues to optimize, with new capacity focusing on high-end categories. Supported by energy efficiency upgrade policies and power infrastructure projects, rigid industry demand is expected to be steadily released. Overall, ordinary grades still face downward price pressure, while high-end, high magnetic induction grain-oriented silicon steel will maintain a stable to positive trend backed by favorable demand.

【SMM Steel】Australian steelmaker BlueScope has announced that its new Metal Coating Line 7 at Erskine Park, NSW, has entered the commissioning phase. The 415 million AUD project will add 240,000 tonnes of annual ZINCALUME® steel capacity. The new line will significantly enhance coating capabilities and support premium brands including TRUECORE® and COLORBOND®. Production is expected to ramp up progressively through 2026. The investment forms part of BlueScope's broader strategy to strengthen Australia's domestic steel supply chain and improve long-term supply reliability for high-value steel products.