[SMM Steel] Global crude steel output reached 157.9 million tonnes in May 2026 among the 70 countries reporting to the World Steel Association (worldsteel), down 0.3% year-on-year. Output for January-May totaled 773.1 million tonnes, a 1.5% decline. China remained the top producer with 84.4 million tonnes, down 2.7% y-o-y; India ranked second with 14.1 million tonnes, up 1.9%; the U.S. produced 7.5 million tonnes, up 9.2%. The CIS+Ukraine region produced 6.7 million tonnes, down 4.8% y-o-y. North America saw the strongest regional growth at +15.6% (10.1 million tonnes), while the Middle East recorded the steepest drop at -19.4% (3.9 million tonnes).

According to the American Iron and Steel Institute (AISI), US domestic raw steel production reached 1.851 million net tons for the week ending June 20, 2026, representing a 3.3% year-on-year increase compared to the 1.792 million net tons produced in the same week of 2025, though experiencing a marginal 0.2% week-on-week decline from 1.854 million net tons. The capability utilization rate stood at 80.2%, up from 79.8% last year but slightly down from 80.3% in the preceding week. Adjusted year-to-date production through June 20, 2026, totaled 44.395 million net tons with an average capability utilization rate of 78.6%, marking a robust 6.1% increase from the 41.828 million net tons and 76.8% utilization recorded during the same period in 2025. Geographically, the Southern district led production with 833,000 net tons, followed by the Great Lakes (496,000 net tons), the Midwest (318,000 net tons), the North East (129,000 net tons), and the Western region (75,000 net tons). The market impact points to a solid stabilization in domestic steel output; the consistent capability utilization above 80% and strong year-to-date growth reflect that North American mills are successfully sustaining production volumes to meet steady regional consumption amid a highly protected trade environment.

China’s rebar futures fell below around 432 USD/tonne, the lowest in two months, as weak economic data and the property downturn weighed on demand expectations. May crude steel output dropped 2.7% YoY to 84.35 million tonnes, while slower fixed-asset investment and consumption further pressured sentiment. Steel exports rose 8.8% MoM in May, but Jan–May exports were still down 8.1% YoY amid rising trade barriers.

[SMM Insights] China's Steel Export Landscape to Middle East Reshaped: Finished Products Stall while Billets Stand Out Looking back at 2025, the Middle East market was undoubtedly the most dazzling "emerging dynamic market" in China's overseas steel landscape. In 2025, China's total steel exports to the Middle East reached 15.81 million mt, with monthly shipments basically stable in the high range of 1.2–1.3 million mt. Against the backdrop of total annual steel exports of 134 million mt, up 14% YoY, the Middle East market accounted for 11%–12% of China's total overseas steel export share. This means that in a single geo-economic region, its share and strategic reliance were second only to Southeast Asia, serving as the "second largest core pillar" for China's steel going global. In terms of product mix, high-added-value HRC (29% share), steel pipes essential for oil and gas projects (18% share), and medium-thickness plates (14% share) formed the three dominant players, reflecting the region's strong diversified industrial and infrastructure throughput capacity. However, it was precisely due to such a massive trade base in 2025 and high reliance on conventional Persian Gulf shipping lanes that when geopolitical storms suddenly struck and straits were dramatically blocked, the resulting "broad market stall" and supply chain disruption were so severe. Below, we will analyze in order: the specific situation of China's steel exports to the Middle East, how cargo pressure was shifted through port replacements during the strait blockade, and how the export landscape will be reshaped after the latest US-Israel negotiations? The "Stall" and Structural Anomaly of China's Steel Exports to the Middle East Data Source: SMM, China's General Administration of Customs First, let's look at total export performance. According to SMM historical data and the latest customs export trends, China's total steel exports to the Middle East in the first four months of 2026 plummeted from 5.47 million mt in the same period of 2025 to 3.57 million mt, with April exports directly halving. Specifically, among China's 5.47 million mt of steel exports to the Middle East from January to April 2025, a highly advanced finished-product-oriented export characteristic was evident. HRC (29%), steel pipe (18%), coated steel (15%), and medium-thickness plates (14%) constituted the four mainstays of China’s steel trade. In terms of destination countries, Saudi Arabia’s rigid demand for offshore/oil & gas pipe (986,000 mt) and the UAE’s strong processing throughput of general HRC (1.607 million mt) and medium-thickness plates (779,000 mt) jointly established the traditional “dual-core consumption hinterland” within the Persian Gulf. Data source: SMM, General Administration of Customs of China Supply Shock and Physical Scissors Gap: The “Billet Export Bonanza” Under a Double Squeeze Since the start of 2026, the blockade of the Persian Gulf Strait caused by geopolitical conflicts significantly weakened overall shipments, while a dramatic “underlying mutation” simultaneously unfolded in the product mix. Steel billet, a minor product that previously accounted for only an 8% share (431,000 mt), registered a strong countertrend increase of 24% in the first four months of 2026. According to the SMM survey, the underlying driver of this anomaly originated from a localized supply shock induced by geopolitical shifts in Iran. If the closure of the Persian Gulf Strait severed the “aorta” of Middle Eastern steel imports, the sudden destruction of Iran’s two largest steel giants—Mobarakeh Steel Company (MSC) in Isfahan and Khuzestan Steel Company (KSC)—on March 27, 2026, completely ignited a “raw material upheaval” within the region. Iran is the world’s tenth-largest and the Middle East’s largest crude steel producer (accounting for over 50% of the region’s total crude steel output), with annual steel exports exceeding 10 million mt, among which semi-finished steel billets are the absolute mainstay. Mobarakeh (MSC) has an annual capacity of 11.8 million mt (20% of Iran’s total capacity), making it the undisputed “King of Flat Products/Sheets & Plates” in the Middle East; Khuzestan (KSC) is Iran’s second-largest steel producer and its most critical production base for slabs and billets. Data source: SMM, General Administration of Customs of China Under normal conditions, Iran was the primary supplier of low-priced steel billets to local rolling mills in the Middle East. With the sharp contraction in Iran's external supply, rolling mills in the Middle East, particularly in Oman and parts of the UAE outside the Gulf that were not directly affected by the blockade, faced severe raw material supply disruption risks. To maintain production, local buyers quickly released a large number of urgent inquiries to the international market. According to SMM survey, the huge demand gap for steel billets created by Iran's exit was filled and shared by supplies from China, India, and Russia. Because the local shortage was mainly crude steel raw material for rolling sheets and plates, and the equipment destruction from explosions meant that rolling lines were the first to restart, the main incremental product in these counter-trend orders was steel slab. This situation shares similarities with the article at https://mp.weixin.qq.com/s/bsrZaRRSRDHC_FmGLulJOQ (Middle East turmoil triggers "mismatch", China accelerates filling a supply vacuum of about 2.3 million mt in Southeast Asia), which mentioned that China would accelerate taking over steel billet supply gaps. That is, despite the decline in steel exports this year, billet exports also achieved counter-trend growth. Stock Game: The "X-Shaped Crossover" of Inside-Gulf Shutdowns and Outside-Gulf Safe Havens Verified by SMM through freight forwarders, steel trade (especially medium-thickness plates, pipes, and steel billets) relies heavily on bulk or breakbulk vessels. When container liners encounter blockades, they can easily reroute by amending bookings via computer systems, but the diversion of bulk carriers faces rigid constraints from destination port drafts, specialized handling equipment (such as large quay cranes), and inland truck connections. Therefore, over the past two months, the supply chain staged a dramatic "port drift" inside and outside the Persian Gulf. The following uses SMM's panoramic shipping data to explain in detail the changes in cargo flow between ports. Under normal conditions, over 70% of China's steel shipments to the Middle East converged densely on Jebel Ali Port inside the Persian Gulf and Dammam Port on the eastern coast of Saudi Arabia. But after the strait blockade, steel port arrivals at these two traditional hubs showed a historic "physical shock" in SMM's high-frequency shipping data (falling to zero from April to May). Meanwhile, the diverted cargo, fighting to survive, surged wildly toward alternative ports outside the strait, tearing open a "lifeline of safety" spatially: ① "Overload Surge" at Oman's Port of Sohar: As the most critical cross-border multimodal transshipment hub outside the Gulf, its port arrivals in April surged nearly fivefold MoM. Large batches of Chinese HRC and steel billet originally destined for the inner Gulf were forced ashore here, causing massive congestion at the port in May as cross-border heavy truck capacity collapsed. ② "Western Route Counterflow" at Saudi Arabia's Jeddah Port: Saudi Arabia abandoned its eastern sea route (Dammam Port) nationwide, forcibly redirecting all Chinese orders to Jeddah on the Red Sea side, causing its throughput to surge to a peak of 361,000 mt in April. Source: SMM, Google Maps However, it should be noted that while cargo can be transferred via other ports in the short term, port arrivals in May have already shown a weakening trend again. The reason is that alternative ports outside the Gulf simply cannot handle such massive and concentrated cargo volumes, leading to extremely severe congestion. According to SMM's survey, because navigation within the Gulf is no longer possible, some shipping lines originally bound for Jebel Ali had to divert to Fujairah, but are still queuing for berths. Jeddah Port faces similar issues. With tight capacity, prices keep surging, and transportation faces severe obstacles. Source: SMM Outlook for Change: With the US-Iran blockade-lifting deal, what impact will the shipping supply chain face? After 108 days of the "dual blockade" (Iran's blockade of the strait and the US's counter-blockade of Iranian ports) that gripped the lifeline of global energy and commodities, the US and Iran officially issued successive high-profile statements announcing a ceasefire memorandum of understanding. The relevant timeline is summarized below. Data source: Compiled by SMM from public channels The news, once released, triggered a strong market reaction. On one hand, there are expectations for export increments from shipping recovery; on the other hand, there are certain demand expectations for post-disaster reconstruction. According to the latest SMM survey, most exporters have not responded enthusiastically to the lifting of the blockade and remain skeptical about its actual implementation. Therefore, from the perspective of actual order-taking, shipments to the Middle East still need 3 to 4 weeks to be verified. If a full lifting is confirmed, the "demand backlog" caused by the earlier shipping disruptions will see a concentrated release. Based on past customs data and the local supply-demand balance table, SMM roughly predicts that finished steel products will experience strong growth expectations, potentially filling a disaster-induced gap of approximately 1.7-2.1 million mt. Among them, HRC accounts for the highest proportion (29%) of China's finished steel exports to the Middle East. Although the Middle East's largest flat steel giant, Iran's Mobarakeh Steel Company (MSC), has reported production resumptions for its blast furnace previously damaged by war, its capacity is in a post-disaster repair phase and is not expected to fill the local gap in the short term. However, recent market rumors suggest that Indian resources are seizing the Middle Eastern market at lower prices, which will also pose some impact on China's export order-taking. However, for semi-finished products, the reason Chinese steel billets have been "hot" in recent months is the supply gap caused by the strait blockade and the bombing of Iranian steel mills. Once Iran's logistics fully recover, Chinese steel billets will lose their advantage in absolute price, logistics distance, and surrounding multilateral competition, and the demand gap in Southeast Asia previously filled by substituting Iranian sources may also be reclaimed. Recently, according to SMM surveys, billet resources are already circulating in the Middle Eastern market. Through the following comparison of comprehensive landed costs (CFR) for billets in the Middle East, it can be clearly seen that Chinese resources are under comprehensive pressure: Source: SMM Therefore, steel billet exports to the Middle East are expected to be somewhat limited, with competition only possible at lower prices. Preliminary forecasts indicate a pressure reduction of 50,000–250,000 mt. However, we need to broaden our perspective to the global multilateral trade context, and we must not fall into excessive pessimism due to localized marginal reductions. Although the billets exported to the Middle East are under pressure, the incremental steel billet volumes that previously replaced Iranian exports to Southeast Asia may not necessarily be wiped out. Given the uncertainty of the Middle East situation and based on considerations of a more stable supply chain, Southeast Asian buyers may continue to source from Chinese suppliers. Therefore, against the backdrop of an overall steel recovery and resilience in steel billet prices, SMM maintains its earlier view, holding a moderately optimistic stance on annual steel exports, with expectations of "steady incremental growth." Finally, it needs to be added that, currently, due to severe port congestion, even if the strait is confirmed passable, it will still take a long time for actual cargo to arrive and cannot immediately be reflected in the data. At the same time, ocean freight rates will also maintain high-level fluctuations in the short term due to unfavorable port cargo pick-up. 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In May, under the strong leadership of the CPC Central Committee with Comrade Xi Jinping at its core, all regions and departments thoroughly implemented the decisions and arrangements of the CPC Central Committee and the State Council, adhered to the general principle of pursuing progress while ensuring stability, fully, accurately and comprehensively implemented the new development philosophy, accelerated the creation of a new development pattern, earnestly carried out more proactive macro policies, and effectively responded to external shocks and challenges. Production and supply rose steadily, employment and prices remained generally stable, the resilience of foreign trade continued to manifest, new driving forces grew stronger, and the national economy sustained a generally stable development trajectory with improvement and upgrading. Data from the National Bureau of Statistics (NBS) showed that in May, the value added of industrial enterprises above designated size grew by 4.5% YoY in real terms, 0.4 percentage point faster than the previous month. On a MoM basis, the value added of industrial enterprises above designated size increased by 0.40% from April. For January-May, it grew by 5.4% YoY. Value Added of Industrial Enterprises Above Designated Size Grew by 4.5% in May 2026 In May, the value added of industrial enterprises above designated size grew by 4.5% YoY in real terms (the real growth rates of value added are calculated after deducting price factors), 0.4 percentage point faster than the previous month. On a MoM basis, the value added of industrial enterprises above designated size increased by 0.40% from April. From January to May, it rose by 5.4% YoY. By sector, in May, the value added of the mining industry grew by 2.3% YoY, manufacturing by 4.4%, and the production and supply of electricity, heat, gas and water by 7.6%. By ownership, in May, the value added of state-holding enterprises grew by 3.7% YoY; joint-stock enterprises by 5.2%, enterprises funded by foreign investors or investors from Hong Kong, Macao and Taiwan by 1.9%; and private enterprises by 2.7%. By industry, in May, the value added of 28 out of the 41 major industries registered YoY growth. Among them, coal mining and washing grew by 3.5%, petroleum and natural gas extraction by 1.5%, agricultural and sideline food processing by 1.5%, wine, beverages and refined tea manufacturing fell by 2.7%, the textile industry grew by 2.6%, chemical raw materials and chemical products manufacturing by 0.3%, non-metallic mineral products fell by 5.6%, ferrous metals smelting and rolling processing grew by 1.6%, non-ferrous metals smelting and rolling processing fell by 4.5%, general equipment manufacturing grew by 6.7%, special equipment manufacturing by 9.1%, automobile manufacturing by 8.3%, railway, shipbuilding, aerospace and other transport equipment manufacturing by 7.4%, electrical machinery and equipment manufacturing by 4.7%, computer, communication and other electronic equipment manufacturing by 17.0%, and electricity and heat production and supply by 8.7%. By product, in May, among the 626 products of industrial enterprises above designated size, 300 saw YoY output growth. Specifically, steel output was 123.03 million mt, down 2.8% YoY; cement 149.91 million mt, down 8.1%; ten non-ferrous metals 6.98 million mt, up 2.2%; ethylene 3.38 million mt, up 2.1%; automobiles 2.582 million units, down 3.2%, of which NEVs 1.489 million units, up 17.8%; power generation 784.3 billion kWh, up 4.2%; crude oil processing volume 53.72 million mt, down 9.1%. In May, the product sales ratio of industrial enterprises above designated size was 96.0%, down 0.1 percentage point YoY; the export delivery value of industrial enterprises above designated size reached 1,388.4 billion yuan, a nominal YoY increase of 10.1%. In May, National Economy Operated Generally Stable, with New and Quality Development In May, under the strong leadership of the CPC Central Committee with Comrade Xi Jinping at its core, all regions and departments earnestly implemented the decisions and plans of the CPC Central Committee and the State Council, adhered to the general principle of pursuing progress while ensuring stability, fully and faithfully applied the new development philosophy, accelerated the creation of a new development pattern, effectively implemented more proactive macro policies, and effectively responded to external shocks and challenges. Production supply was stable with an upward trend, employment and prices were generally stable, the resilience of foreign trade continued to be demonstrated, and new growth drivers grew stronger. The national economy continued its development trend of overall stability with new and quality improvements. 1. Industrial Production Accelerated, with Equipment and High-Tech Manufacturing Growing Rapidly In May, the value added of industrial enterprises above designated size increased by 4.5% YoY, 0.4 percentage points faster than the previous month; it grew 0.40% MoM. By the three major categories, the value added of mining grew 2.3% YoY, manufacturing grew 4.4%, and production and supply of electricity, heat, gas, and water grew 7.6%. The value added of equipment manufacturing grew 9.5% YoY, and high-tech manufacturing grew 15.1%, accelerating by 1.2 and 2.3 percentage points respectively from the previous month. By type of ownership, the value added of state-controlled enterprises grew 3.7% YoY; joint-stock enterprises grew 5.2%, foreign, Hong Kong, Macau, and Taiwan invested enterprises grew 1.9%; private enterprises grew 2.7%. By product, the output of 3D printing equipment, lithium-ion batteries, and industrial robots grew 54.4%, 40.0%, and 27.9% YoY respectively. In the January-May period, the value added of industrial enterprises above designated size grew 5.4% YoY. In May, the manufacturing PMI was 50.0%, and the index of enterprise production and operation expectations was 53.9%. In the first four months, the total profits of industrial enterprises above designated size reached 2,435.8 billion yuan, up 18.2% YoY. II. Services Grew Steadily, Modern Services Developed Soundly In May, the national services production index grew 4.4% YoY, 0.1 percentage point faster than the previous month. By sector, the production indices of information transmission, software and IT services, leasing and business services, financial services, and transport, storage and postal services grew 11.3%, 10.9%, 7.0%, and 4.8% YoY, respectively. In January-May, the national services production index rose 4.8% YoY. In January-April, the operating revenue of service enterprises above the designated size increased 6.4% YoY. In May, the business activity index for services stood at 50.3%, and the business activity expectations index for services was 55.4%. Among them, the business activity indices for railway transport, telecommunications, radio and television, and satellite transmission services, and insurance were in the relatively high prosperity range of above 55.0%. III. Market Sales Maintained Growth, Service Retail Maintained Sound Momentum In January-May, total retail sales of consumer goods and services grew 2.8% YoY, with retail sales of services up 5.4% and retail sales of goods up 1.2%. In January-May, total retail sales of consumer goods reached 20,603.1 billion yuan, up 1.4% YoY. In January-May, nationwide online retail sales of goods and services reached 8,317.7 billion yuan, up 5.9% YoY, of which online retail sales of goods were 5,271.8 billion yuan, up 5.0%, and online retail sales of services were 3,045.9 billion yuan, up 7.6%. In May, total retail sales of consumer goods amounted to 4,109 billion yuan, down 0.6% YoY and down 0.38% MoM. By location of business establishments, retail sales of consumer goods in urban areas came in at 3,574.1 billion yuan, down 0.9% YoY; retail sales in rural areas were 534.9 billion yuan, up 1.5% YoY. By type of consumption, retail sales of goods stood at 3,648.5 billion yuan, down 0.7% YoY; catering revenue was 460.5 billion yuan, up 0.6% YoY. Sales of daily necessities and some upgraded goods maintained growth. Retail sales of beverages, clothing, footwear, hats and textiles, and cosmetics by enterprises above the designated size increased 6.1%, 3.8%, and 2.5% YoY, respectively. IV. Infrastructure Investment Maintained Growth, Investment in Intellectual Property Products Accelerated In January-May, national fixed-asset investment (excluding rural households) reached 17,851.2 billion yuan, down 4.1% YoY; excluding real estate development, fixed-asset investment fell 1.2%. Among this, investment in intellectual property products grew 9.3% YoY, 0.4 percentage points faster than in January-April. By sector, infrastructure investment rose 0.6% YoY, manufacturing investment fell 0.4%, and real estate development investment dropped 16.2%. The floor space of newly built commercial buildings sold nationwide was 313.2 million m², down 10.8% YoY; the sales value of newly built commercial buildings was 2,936.6 billion yuan, down 13.5% YoY. By industry, investment in the primary sector rose 5.9% YoY, investment in the secondary sector edged up 0.1% YoY, and investment in the tertiary sector fell 6.8% YoY. Private investment declined 7.1% YoY; excluding real estate development, private investment dropped 3.5% YoY. Investment in high-tech industries grew 4.5% YoY, with investment in computer and office equipment manufacturing, aviation and spacecraft and equipment manufacturing, and information services up 18.3%, 16.7%, and 13.8%, respectively. In May, fixed asset investment (excluding rural households) fell 1.91% MoM. V. Rapid Growth in Goods Imports and Exports with Continued Optimization of Trade Structure In May, total goods imports and exports reached 4,451.6 billion yuan, up 16.9% YoY, accelerating 2.7 percentage points from the previous month. Exports stood at 2,587.8 billion yuan, up 13.8% YoY, while imports totaled 1,863.8 billion yuan, up 21.5% YoY. From January to May, total goods imports and exports amounted to 20,682.7 billion yuan, up 15.3% YoY. Exports came to 11,913.7 billion yuan, up 11.8% YoY, and imports hit 8,769.1 billion yuan, up 20.5% YoY. From January to May, imports and exports under Ordinary Trade rose 8.3% YoY. Imports and exports with Belt and Road partner countries grew 13.6% YoY. Imports and exports by private enterprises increased 15.5% YoY. Exports of mechanical and electrical products expanded 18.4% YoY. VI. Generally Stable Employment with a Decline in the Surveyed Urban Unemployment Rate From January to May, the surveyed urban unemployment rate averaged 5.2%. In May, the surveyed urban unemployment rate was 5.1%, down 0.1 percentage points MoM. The surveyed unemployment rate for the local household labor force was 5.2%, and that for the non-local household labor force was 4.9%, with the rate for the non-local agricultural household labor force at 4.9%. The surveyed urban unemployment rate across 31 major cities was 5.1%, down 0.1 percentage points MoM. The average weekly working hours of employees in enterprises nationwide was 48.2 hours. VII. Mild Rise in Consumer Prices and Widening YoY Increase in Producer Prices In May, the national consumer price index (CPI) rose 1.2% YoY, the same growth as the previous month, and fell 0.1% MoM. By category, prices for food, tobacco, alcohol, and dining out fell 0.9% YoY, clothing prices rose 1.4% YoY, housing prices edged down 0.2% YoY, prices for household articles and services increased 1.8% YoY, transportation and communication prices climbed 5.4% YoY, education, culture, and entertainment prices went up 1.3% YoY, healthcare prices grew 2.1% YoY, and prices for other goods and services surged 9.9% YoY. Among food, tobacco, alcohol, and dining-out prices, pork prices fell 16.1%, fresh fruit prices dropped 2.2%, grain prices edged down 0.3%, while fresh vegetable prices rose 1.6%. Core CPI, which excludes food and energy prices, posted a 1.1% YoY increase. For January–May, national consumer prices rose 1.0% YoY. In May, national industrial producer EXW prices rose 3.9% YoY, with the growth rate widening by 1.1 percentage points from the previous month, and rose 0.5% MoM. National industrial producer purchasing prices rose 5.8% YoY and 1.3% MoM. For January–May, national industrial producer EXW prices and purchasing prices rose 1.0% and 1.6% YoY, respectively. Overall, the national economy operated stably in May, with development resilience continuing to show. However, it should also be noted that the external environment has become more complex and volatile, the contradiction of strong domestic supply and weak demand remains pronounced, some enterprises face considerable operating pressure, and the foundation for sustained economic improvement still needs consolidation. In the next stage, efforts should focus on adhering to Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era as guidance, maintaining the principle of pursuing progress while ensuring stability, improving quality and efficiency, strengthening counter-cyclical and cross-cyclical adjustments, continuously expanding domestic demand and optimizing supply, enhancing increments and revitalizing existing assets, developing new quality productive forces according to local conditions, deepening the building of a unified national market, working to stabilize employment, enterprises, markets, and expectations, and promoting effective qualitative improvement and reasonable quantitative growth of the economy. Recommended reading:

Hoa Phat’s 2025 results marked a major step-up driven by the ramp-up of Dung Quat 2, pushing crude steel output above 11 million tons and lifting earnings through higher volumes and cost dilution despite weak global steel prices. Growth was supported by stronger HRC and downstream sales, a rising export mix, and continued domestic dominance. The year also signals a strategic shift toward higher-value products and future capacity expansion into rail and special steels.