China steel market lukewarm on 2026-30 Five-Year Plan demand outlook

China's steel market Oct. 24 displayed a lukewarm reaction to the newly unveiled 15th Five-Year Plan for 2026-30, with domestic market participants expressing concerns that the outlined development priorities may not be sufficient to drive substantial steel demand in the years ahead.

Steel futures on the Shanghai Futures Exchange declined day over day after China published its economic and social development blueprint Oct. 23.

The most actively traded rebar and hot-rolled coil January contracts on the Shanghai Futures Exchange closed at Yuan 3,046/mt ($428/mt) and Yuan 3,250/mt on Oct. 24, down 0.8% and 0.2%, respectively, from Oct. 23.

The plan sets forth key economic and social development objectives, such as sustaining economic growth within a reasonable range, boosting household consumption, advancing technological self-reliance and achieving carbon peak targets as scheduled.

"Many of the plan's priorities [are seen] as extensions of existing policies rather than new initiatives," said a China-based mill source. "Market consensus suggests that steel demand across the property, infrastructure and manufacturing sectors is unlikely to see substantial growth through at least 2026."

The 15th Five-Year Plan targets urban renewal initiatives within the infrastructure sector.

Zhen Shanjie, director of the National Development and Reform Commission, said during an Oct. 24 press conference on 15th Five-Year Plan that China plans to build and renovate over 700,000 km of underground pipeline networks over 2026-30, requiring new investment of more than Yuan 5 trillion.

However, according to data from the Ministry of Housing and Urban-Rural Development, China completed 175,000 km of underground network construction and renovation in 2024, with over 100,000 km projected for 2025.

"China's urbanization has almost been completed, and it is difficult to stimulate traditional infrastructure like bridge and road construction again," a trading source said. "The steel intensity of urban renewal should be much lower than that of traditional infrastructure."

Sectoral developments

Meanwhile, the country's property sector will prioritize "high-quality development," with an emphasis on affordable housing initiatives and comprehensive urban village renovation projects, according to the five-year plan.

Some market sources said China's new home construction starts, a major steel demand driver, could remain in a downward trend in 2026, while the emphasis on "high-quality development" is expected to provide only a limited boost to construction steel demand.

In manufacturing, the 15th Five-Year Plan seeks to strengthen the global position and competitiveness of traditional industries, such as chemicals, machinery and shipbuilding, while also accelerating the development of strategic emerging industries, including new energy, new materials, aerospace and low-altitude economy sectors.

"Manufacturing's steel consumption is expected to remain solid in 2026, but, similar to this year, its growth momentum is unlikely to fully offset the slower demand in the construction sector," said a second mill source.

Several market participants noted that growth momentum in manufacturing may continue to depend heavily on export markets, as domestic consumption is not anticipated to see significant improvement in 2026 due to weak household income expectations.

The plan also highlights energy conservation and carbon reduction in key industries, including the steel, non-ferrous metals and petrochemicals sectors.

The two mill sources stated that reducing carbon emissions or engaging in carbon allowance trading could significantly raise steel mills' production costs. They added that while the approach to decarbonization over the next five years remains to be seen, major actions are not expected to be implemented in 2026.