[SMM Analysis] Grain-Oriented Silicon Steel Prices Likely to Remain Weak and Stable in September

Monthly Review & Outlook: Project Progress Fails to Meet Expectations; Grain-Oriented Silicon Steel Prices Likely to Remain Weak and Stable in September

August Price Review

Source: SMM

In August 2026, prices of mainstream grain-oriented silicon steel grades continued the downward trend seen in July, with grades including B23R085, B23P090 and 30G120 falling in tandem and the overall price center moving further down. The monthly average price of core grade B23R085 stayed weak in August; the supply-demand balance shifted from surplus to deficit during the month, bringing prominent supply pressure that weighed on spot prices. According to the price forecast curve, there was no notable rebound momentum for prices after August. Overall, the supply-demand fundamentals of grain-oriented silicon steel deteriorated in August. Lacking demand stimulus and with relatively ample material supply, the market kept correcting, all grades trended lower, and market participants adopted a wait-and-see stance.

Fundamental Analysis

Source: SMM

Domestic grain-oriented silicon steel production schedule in August fell month-on-month, with production plans cut from July, yet overall output remained at a relatively high level. In terms of product mix, high-induction grain-oriented silicon steel (HIB) was the major output in August, while conventional grain-oriented silicon steel (CGO) accounted for a low share. Steel mills continued to tilt resources toward high value-added HIB grades, and capacity rollout for CGO grades contracted. Entering September, the production schedule for grain-oriented silicon steel edges up slightly; CGO output stays low and HIB remains the primary product.

On the whole, steel mills implemented modest voluntary production cuts in August to ease earlier oversupply pressure, yet the cuts were limited and spot inventory destocking proceeded slowly. September’s production schedule sees a slight rise, with steady capacity release for HIB grades and sufficient supply of high-induction products. Although monthly production of grain-oriented silicon steel stays relatively stable across August and September, transformer manufacturers suffer from insufficient new orders and weak downstream restocking willingness. The scale of supply reduction is not enough to reverse the loose supply-demand balance. Supply cuts offer limited support to prices, and grain-oriented silicon steel spot prices remain under pressure.

Source: Public data, SMM

New installed capacity of various power sources for the power grid showed a divergent pattern in July 2026. Wind and solar power constitute the core demand drivers for grain-oriented silicon steel, together accounting for over 60% of total grid-side consumption of the material. Thermal power takes up 30%, while hydropower and nuclear power represent a small proportion. July saw robust new wind power installed capacity and moderate solar power additions, delivering fundamental demand support for transformers and grain-oriented silicon steel. Incremental new installed capacity for hydropower, thermal power and nuclear power was limited, providing little boost to grain-oriented silicon steel. In general, grid-side demand for grain-oriented silicon steel was underpinned by wind and solar installations in July, yet new installed capacity declined month-on-month. Transformer manufacturers recorded little growth in newly signed orders. Downstream buyers mostly placed small orders on an as-needed basis with low initiative to build up inventories. Overall demand momentum remains inadequate to lift grain-oriented silicon steel prices.

September Price Outlook

Looking ahead to September 2026, on the supply side, China’s total grain-oriented silicon steel output will edge up slightly. Major state-owned steel mills will mostly maintain high operating rates, keeping overall supply stable. Despite the continued price decline in August, leading steel mills including Baowu raised their base price for grain-oriented silicon steel by RMB 50 per tonne for September, showing clear intent to hold up and lift prices. Production enthusiasm remains decent, with steady release of high-grade materials and ample supply of conventional grades.

On the demand side, China’s 15th Five-Year ultra-high voltage (UHV) projects continue to be rolled out. As the hot summer slow season ends in August, downstream operations will pick up in September, and previously awarded State Grid and China Southern Power Grid tender orders will gradually enter the fulfillment phase. Nevertheless, downstream enterprises will still purchase materials only as required. In addition, India’s anti-dumping investigation against Chinese grain-oriented silicon steel is still underway. The domestic market faces short-term negative impacts from returned cargoes due to hampered exports.

On the cost side, September marks the traditional “Golden September” consumption peak. With hot and rainy weather subsiding, marginal improvement is expected in construction progress of end-user projects and downstream restocking demand. The hot rolled coil price center is projected to move upward in September.

In summary, SMM expects grain-oriented silicon steel prices to fluctuate in September 2026, with downside risks remaining.