[SMM Analysis] August Cost-Side Support Drove Prices Up; Drift Higher Expected in September Amid Peak Season

I. Review of Cold-Rolled and Galvanized Market in August
The nationwide average cold-rolled price in August was 3,776 yuan/mt, up 2.68 yuan/mt from July (3,773.26 yuan/mt).
The nationwide average galvanized price in August was 4,075.21 yuan/mt, up 4.04 yuan/mt from July (4,071.17 yuan/mt).
In August, the cold-rolled and galvanized market consolidated at lows and drifted higher, mainly driven by cost-side news. In early August, Shanxi Coking Coal held a meeting emphasizing mine safety, which impacted supply expectations, and together with BHP strike rumors, cost support strengthened, driving passive gains in finished steel products. Cost-side news continued to disrupt, and although demand for finished steel remained sluggish, steel mills raised prices for September while the market still held expectations of a peak season, causing prices to edge up modestly rather than surge. The consolidation trend continued gradually into late August. In late August, coke initiated price increases, and both coking coal and coke futures and spot prices strengthened simultaneously, substantially lifting cost support and driving sharp gains in finished steel. At month-end, market sentiment warmed, but as the speed of earlier price increases outpaced demand, finished steel prices were in the doldrums.

SMM Nationwide Average Cold-Rolled Price

Source: SMM

SMM Nationwide Average Galvanized Price

Source: SMM

II. Review of Cold-Rolled and Galvanized Market Fundamentals in August
From a fundamental perspective, steel mill orders in August improved compared with July, and with the transition from off-season to peak season, orders gradually picked up. In August, inventory trends for cold-rolled and galvanized steel diverged. Total cold-rolled inventory stood at about 1.6376 million mt, down 22,700 mt from July, while total galvanized inventory was approximately 1.963 million mt, up 40,000 mt from July. In August, traders began stockpiling ahead of the peak season, but downstream demand recovery fell short of expectations. The cold-rolled market had greater liquidity than the galvanized market, and although overall market conditions had not yet recovered, cold-rolled showed better destocking, with inventory pressure smaller than that of galvanized.

SMM Total Cold-Rolled Inventory

Source: SMM

SMM Total Galvanized Inventory

Source: SMM

From the demand side, production of automobiles, home appliances, and other manufacturing sectors diverged in June from May, providing only modest support for steel demand. In June 2026, China's total automobile production was 2.76 million units, up about 5.5% MoM from May, but down about 1.2% YoY from June 2025. In June 2026, total production of the four major home appliances in China was 60.106 million units, down about 0.5% MoM from May, and down about 4.9% YoY from June 2025.

China's Automobile Production

Source: National Bureau of Statistics (NBS)

China's Home Appliance Production

Source: National Bureau of Statistics (NBS)
3. September Cold Galvanized Market Outlook
Looking ahead to September, cold galvanized prices are expected to drift higher. Cost side, according to SMM statistics, in August many steel mills underwent maintenance. After the maintenance period ends, hot metal production is expected to increase, iron ore demand is anticipated to rise, and its price trend is expected to be strong. Coke is expected to still have expectations of a third price increase. Overall, cost support in September will be relatively strong. Demand side, September remains in the peak season, and demand is expected to recover. However, considering that this year's overall demand has been weak and there has yet to be any significant improvement in current market demand, the upside room for demand in September is expected to be limited. Overall, cold galvanized prices in September are expected to rise, supported by peak season demand, but at the same time capped by the demand peak, so the upside room for prices is expected to be limited. Nevertheless, attention should still be paid to specific downstream industry demand in September. If demand improves more than expected, prices could break significantly higher.