Steel prices fluctuated lower during October 19–23, 2026, as both supply and demand declined, according to a steel industry weekly report released by Orient Securities on October 25. Production costs also eased, providing some relief for steelmakers even as selling prices weakened.

The report put the average cost of hot metal, excluding tax, at 2,464 yuan per tonne, down 0.81% from the previous week. The share of profitable steelmakers rose to 11.26%, an increase of 3.03 percentage points.

These figures point to a distinction between steel price performance and producer profitability. Lower production costs can create room for margins to improve during a weak pricing period. The profitability figure measures the proportion of steelmakers making a profit; it does not mean that producers achieved an average profit margin of 11.26%. With that share still low, the weekly improvement suggests limited relief rather than a broad recovery in earnings.

The simultaneous decline in supply and demand also limits how strongly the price outlook can be read. Reduced supply alone does not establish a basis for firmer prices when demand is weakening at the same time. Whether cost relief translates into sustained earnings improvement will depend on the relative movement of production costs and steel selling prices, alongside changes in demand.

Orient Securities recommended paying attention to opportunities for a valuation recovery in the steel sector. That investment view should be distinguished from evidence of an operating recovery: the reported week showed a higher share of profitable steelmakers, while steel prices remained under pressure. Subsequent changes in demand, supply and the share of profitable producers will help show whether the improvement can last.