FX.co ★ Steel Hovers Near 9-Month Low

Steel rebar futures in China were hovering around CNY 2,960 per tonne, maintaining a tight range since hitting a nine-month low of CNY 2,920 on June 13th. This stabilization reflects the effect of decreased ferrous metal demand and escalating protectionist measures against Chinese steel exports, overshadowing the impact of lower supply levels. In May, construction expansion in China, as indicated by the NBS PMI, fell to a four-month low. This decline was influenced by the heightened tariff threats from the United States, which curbed consumption, and an oversupply in housing stock, which reduced the necessity for new residential projects, further compounded by the slower summer season. Furthermore, the United States increased its tariffs on steel imports to 50%, diminishing import demand and increasing the availability of ferrous metals among major Asian markets. In response, Beijing has announced plans to cut capacity for steel furnaces and mills this year. Baosteel, one of the industry leaders, has projected a reduction in production by 50 million tonnes.