Asian steel spreads widen, while Chinese steel prices remain under short-term pressure

Overview

This is a J.P. Morgan daily report on the steel industry, focusing on Asian steel spreads, pressure on Chinese steel prices, developments in Australian green steel investment, and the price premiums of US and Australian hot-rolled coil relative to Asian benchmarks. The report does not provide rating updates for any individual listed company; instead, it focuses on news flow, price and spread tracking, and key charts.

Core views

The report's main view is cautious: although Asian spreads widened by 1 percentage point, Chinese steel prices may remain under pressure. This price pressure suggests that regional supply and demand, inventories, buyer sentiment, and end-market demand remain key variables in assessing the short-term outlook for the steel sector. In green steel, Greensteel Australia's A$500m zero-carbon steel mill target indicates that investment in low-carbon capacity is continuing, although its impact on short-term steel prices is limited.

Analysis framework

The report uses a daily industry-report framework, combining price and spread tables, regional hot-rolled coil premiums, steel delivery times, scrap prices, and company earnings-related charts to track short-term supply-demand conditions and margin pressure in the steel market. The text also notes that readers can contact the analysts for the latest data on inventories, buyer sentiment, and demand surveys.

Methodology notes

• Industry price trackingSteel spread and premium monitoring

  Regional steel price strength is assessed using indicators such as Asian spreads, the US HRC premium to Asian IPP, and the Australian HRC premium to the Asian benchmark.

  Spreads and premiums can be used to assess steel supply and demand, import substitution pressure, and profit margins across regions, although the report does not disclose a complete numerical table.

• Demand and inventory trackingInventory, buyer sentiment, and demand surveys

  The report indicates that readers should contact the analysts for the latest data on inventories, buyer sentiment, and demand surveys.

  These indicators are typically used to determine whether pressure on steel prices is caused by weak demand, inventory accumulation, or declining purchasing intent.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Steel sector

  Core covered asset

  Strengths

  Widening Asian spreads indicate marginal improvement in some regional pricing structures, while green steel investment provides a long-term transition theme.

  Weaknesses

  Chinese steel prices are expected to remain under pressure, and short-term supply-demand and margin conditions remain weak.

  Comparison

  The report compares regional price premiums, including US HRC relative to Asian IPP and Australian HRC relative to the Asian benchmark.

  Risks

  If Chinese demand is weaker than expected or inventory pressure increases, steel prices and steelmakers' profits could come under further pressure.

• Greensteel Australia

  Thematically relevant company or project

  Strengths

  It plans to advance a A$500m zero-carbon steel mill, aligning with green steel and low-carbon manufacturing trends.

  Weaknesses

  The report does not provide details on project returns, capacity, financing completion, or the commissioning timeline.

  Comparison

  Compared with the traditional steel price cycle, the project is more focused on long-term structural and low-carbon transition themes.

  Risks

  Capital expenditure, technology selection, policy support, and commercialization progress remain uncertain.

• BlueScope Steel (BSL.AX)

  Steel-related company within the analysts' coverage universe

  Strengths

  It is included in the coverage list and may be affected by changes in Australian and regional HRC spreads.

  Weaknesses

  This report does not provide a company-specific rating, target price, or earnings forecast.

  Comparison

  It can be assessed alongside the Australian Steel Products-related spread charts.

  Risks

  Pressure on regional steel prices, raw material price volatility, and slowing demand could affect earnings.

• Sims (SGM.AX)

  Scrap and recycled metals-related company within the analysts' coverage universe

  Strengths

  The report includes charts showing the relationship between SGM EBIT and scrap and storage prices, indicating earnings sensitivity to raw material prices.

  Weaknesses

  The report does not disclose specific EBIT forecasts or rating changes.

  Comparison

  It is more exposed to the scrap and recycled metals value chain and is more sensitive to scrap prices than traditional steelmakers.

  Risks

  Fluctuations in scrap prices, the demand cycle, and global metals recycling conditions could affect profits.

Key data

• Asian steel spreads+1%The report title states Asian spreads +1%.
• View on Chinese steel pricesExpected to remain under pressureThe report title explicitly states China steel prices likely to remain under pressure.
• Greensteel Australia zero-carbon steel mill target investmentA$500mThe report title mentions Greensteel Australia targets A$500m zero-carbon mill.
• Report completion time08 Jul 2026 10:19 AM AESTThe text states Completed 08 Jul 2026 10:19 AM AEST.
• Report dissemination time08 Jul 2026 10:30 AM AESTThe text states Disseminated 08 Jul 2026 10:30 AM AEST.

Impact & implications

For investment implications, continued pressure on Chinese steel prices could weigh on regional steelmakers' profits and valuation sentiment, while widening Asian spreads indicate marginal changes in regional pricing structures. The sustainability of these changes needs to be confirmed using inventory, demand survey, and buyer sentiment data. Australian green steel investment supports the long-term low-carbon transition narrative, but in the short term it is more likely to serve as a thematic catalyst than an immediate earnings driver.

Risks

• Chinese steel demand may be weaker than expected, causing prices to continue falling.
• Deterioration in inventories, buyer sentiment, or demand survey data could undermine the sustainability of the spread improvement.
• Volatility in raw material and scrap prices could compress steelmakers' profit margins.
• Green steel projects face uncertainty related to capital expenditure, technology implementation, and commercialization progress.
• The report provides limited usable business content, and some key price tables and chart values are not fully disclosed in the input.

What to watch

• Changes in Chinese spot steel prices and inventories.
• Whether Asian steel spreads can continue to widen.
• Changes in the US HRC premium to Asian IPP.
• Changes in the Australian HRC premium to the Asian benchmark.
• Steel delivery times and buyer sentiment data.
• Financing, approvals, and construction progress for the Greensteel Australia zero-carbon steel mill.