Crude steel production on the decline: how are forecasts for ferrous metals changing?

In July, data published by the World Steel Association indicate a 4.2% month-on-month and 0.3% year-on-year reduction in global crude steel production. The decline was largely driven by China, where crude steel production decreased by 8.1% compared with June and by 3.6% compared with July 2025.

The contraction in steel production has changed financial market expectations for Chinese iron ore prices and European hot-rolled coil prices, as shown by the comparison between the current futures curves and those of the previous month, when July steel production data were not yet available.

Comparison of futures curves

CME Chinese iron ore

CME European hot-rolled coils

The current futures curves for Chinese iron ore and European hot-rolled coils, while showing different trends, both point to a further upward revision of expected values for the coming months.
For 2027, the annual average price implied by Chinese iron ore futures contracts on the CME increased from $94.1/tonne to $94.6/tonne, while that of European hot-rolled coils increased from $882/tonne to $908/tonne.

Changes in financial market expectations for these two exogenous variables have altered the PricePedia steel metals price scenario, as shown in the following chart.

PricePedia forecast for the total European steel metals index, expressed in euros

In aggregate terms, the PricePedia forecast for steel metals prices in euros increased by 0.6% for 2026 and by 1.1% for 2027 compared with the scenario forecast in the previous month.
The upward revision is not solely attributable to the contraction in crude steel production in July, which was more pronounced than expected, but also to the escalation of the conflict in the Middle East, which has led to higher forecasts for energy prices, a component of steel production costs.

PricePedia forecast scenario for individual steel metals categories

The following table reports the annual percentage changes in the PricePedia forecast scenario in euros for the product categories belonging to the steel metals family.

Table of annual percentage changes in steel metals prices expressed in euros

The table shows that, after years of declining prices, PricePedia forecasts a recovery over the 2026-2027 period. For most product categories, price increases are expected to intensify in 2027, in a more restrictive European steel market following the recent introduction of new protectionist measures. In addition to the expected lower supply, the outlook also points to energy prices remaining high in 2027, driven by the recent escalation of tensions in the Middle East.