FX.co ★ Steel Hovers Near 1-Month Low

Steel rebar futures in China have decreased to under CNY 3,120 per tonne, marking their lowest point in over a month. This decline comes as markets reassess the extent of production cuts and fiscal support promised by the Chinese government. Despite earlier indications from Beijing about revamping industrial policy to address overcapacity and mitigate the risk of a deflationary spiral, satellite data revealed that mills in China's primary production regions continued to operate at significant capacity midway through the third quarter. This situation is exacerbated by only a 30% reduction in output at the Tangshan hub, contrary to expectations of a complete shutdown in preparation for Beijing's military parade, which typically necessitates clear skies. On the demand side, China's construction PMI for July dropped to its lowest level since January, casting a shadow over the demand for construction materials. Furthermore, while the Chinese government announced plans to implement expansionary fiscal and monetary policies to boost spending, it has not indicated any major stimulus measures.