[SMM Analysis]Downstream Demand Improves Marginally Non-Oriented Silicon Steel Prices to See Modest Gains in September

Monthly Review & Outlook: Downstream Demand Improves Marginally; Non-Oriented Silicon Steel Prices to See Only Modest Gains in September

August Price Review

Source: SMM

Non-oriented silicon steel prices remained generally weak in August. Prices of mainstream grades edged lower across the board, with both high-grade and medium-low grade products under pressure. The monthly average price of benchmark grade B50A800 fluctuated at a low level. Although the supply-demand gap narrowed slightly in August, supply remained relatively loose. Lacking strong support from downstream demand, prices had limited upward momentum. The market consolidated at low levels overall; declines slowed, yet no clear rebound emerged.

Fundamental Analysis

Source: SMM

Domestic output of non-oriented silicon steel fell month-on-month in August, a notable drop from July, as steel mills proactively cut production schedules. By grade mix, medium-low grades accounted for 66%, high grades 19%, and new-energy grades rose to 15%. Compared with July, the share of medium-low grades declined while new-energy grades increased, and high-grade share stayed stable. Production capacity continued shifting toward high-end products.

Production scheduling for September retains divergent features: medium-low grades will rebound to 69%, high grades fall to 18%, and new-energy grades dip slightly to 14%. Steel mills plan to raise output of medium-low grades in September while trimming the proportion of high-grade production. Overall, August production cuts eased supply pressure to some extent, yet the rebound in medium-low grade output in September reflects steel mills’ improved market expectations for the month.

Source: Public data, SMM

Output of major domestic home appliance categories fell seasonally in July, with production of air conditioners, refrigerators, washing machines and color TVs retreating from earlier peaks. Monthly consumption of non-oriented silicon steel by the home appliance sector declined accordingly. By consumption breakdown, air conditioners represented 65% of silicon steel use in home appliances, making them the largest consumer; refrigerators, washing machines and color TVs accounted for 20%, 11% and 4% respectively. Total silicon steel consumption by home appliances dropped month-on-month in July, dragged down primarily by weaker air conditioner demand.

China’s new-energy vehicle output stayed robust in July. Production of new-energy passenger and commercial vehicles maintained strong resilience, while output of conventional fuel vehicles remained relatively steady. The automotive sector is a core consumer of non-oriented silicon steel. In terms of consumption structure, new-energy passenger vehicles made up 75%, new-energy commercial vehicles 22%, and traditional vehicles only 3%. New-energy models have become the dominant source of automotive silicon steel consumption. Monthly silicon steel consumption by the auto sector edged up month-on-month in July. High production schedules for new-energy vehicles underpinned silicon steel demand and offset part of the home appliance demand slump. Nevertheless, incremental demand from automobiles was insufficient to fully counterbalance the decline in home appliances, leading to only limited overall improvement in downstream demand for non-oriented silicon steel.

September Price Outlook

Looking ahead to September 2026, on the supply side, planned output of non-oriented silicon steel in China is set to rise, with growth concentrated in medium-low grades. For one thing, the traditional off-season is drawing to a close; downstream orders for home appliance and motor manufacturers are expected to pick up, boosting steel mills’ willingness to produce. For another, leading producers including Baowu lifted base prices by RMB 50 per tonne for September, showing clear intentions to prop up and raise prices. This is expected to restore steel mill margins and support production.

On the demand side for home appliances: production continued slowing in August. Most manufacturers scheduled high-temperature shutdowns and equipment maintenance in early August. Orders and sales were mixed. Air conditioners and refrigerators saw weaker orders and sales due to sluggish end-market demand. Washing machines entered their peak season, yet demand fell short of expectations.

For the automotive sector, market performance is projected to be weak early in the month and strong later. In early August, offline sales were hampered by high temperatures, typhoons and other weather disruptions. Demand started to release from mid-August onward. Multiple new models launched by leading new-energy original equipment manufacturers (OEMs) were priced in line with consumer expectations, driving notable increases in store foot traffic and orders, marking a market recovery.

On the cost side, September marks the traditional “Golden September” consumption peak. With hot and rainy weather abating, end-user project construction and downstream restocking demand are anticipated to improve marginally. Hot rolled coil prices are projected to trend higher in September.

In summary, SMM forecasts that medium-low grade non-oriented silicon steel prices will trend upward amid volatility in September 2026, with moderate upside potential.