FX.co ★ Steel Eases from 4-Month High

Steel futures in China experienced a modest decline to CNY 3,200 per tonne, following a recent peak of CNY 3,300 reached on July 25th. This decrease is attributed to the abundant supply of iron ore, which has temporarily reduced costs for steel manufacturers, offsetting the effects of production cuts. Recent data indicates that Australia’s largest bulk terminal reported record export levels, with iron ore deliveries and production from major companies such as Fortescue and Vale exceeding expectations. Despite this, steel futures have seen an 8% increase since the beginning of the month. In response to these developments, Chinese policymakers have promised to reform industrial strategy as part of efforts to tackle overcapacity. Such reforms are expected to improve profit margins for steel producers amid China's ongoing property crisis and the increasing influence of protectionist trade policies from key steel-importing nations, which have weakened demand. Previously, leading producer Baosteel projected a national output decline of 50 million tonnes this year. Additionally, prices received support from the announcement of an ambitious CNY 1.2 trillion hydropower plant project.