FX.co ★ Steel Hovers Near 2-Month High

Steel futures in China are priced at CNY 3,100 per tonne, approaching their peak in the past two months, driven by expectations of reduced supply. This optimism comes as Chinese policymakers have committed to reforming industrial policies to address overcapacity, in accordance with earlier evaluations of the domestic steel market. Implementing such reforms may improve profit margins for steel furnaces and mills, even as the property crisis in China and rising protectionist trade measures from major steel-importing countries weaken demand. Notably, Baosteel, a leading producer, has projected a national output reduction of 50 million tonnes this year. Further boosting the market, the NBS reported that the construction Purchasing Managers' Index (PMI) rose to a three-month high in June, surpassing other economic sectors. This development is consistent with recent initiatives by People's Bank of China (PBoC) officials to inject more liquidity into the financial system and support financially distressed property developers—key consumers of rebar—against further bankruptcy risks.