China's steel industry faced stronger supply than demand in the first three quarters of 2026, while rising fuel costs were the main factor behind declining profitability, according to Tang Zujun, vice president of the China Iron and Steel Association. He spoke at the association's third-quarter press conference on October 30.

Tang said industry efforts to restrain production and reduce inventories since the third quarter had fallen short of expectations. That combination leaves two pressures in focus: higher fuel costs can squeeze producers' margins, while the slower-than-expected reduction in inventories suggests that the supply-demand imbalance may take longer to ease.

Tang also described a shift away from a focus on output toward high-performance, low-carbon steel. A number of high-end products have made their global debuts, supporting steel demand for major engineering projects and advanced equipment manufacturing.

The two developments point to different time horizons. Fuel costs and inventories are immediate concerns for industry profitability, while the contribution of high-end products depends on how demand for those applications develops. The pace of inventory reduction and any further changes in fuel costs will be important indicators to watch.