FX.co ★ Steel Rebounds to Highest in November

In recent trading, steel rebar futures in China have edged up to CNY 3,050 per tonne, marking the highest level since early November. This increase is attributed to reduced supply, a consequence of Beijing’s enforcement of its anti-involution policy. In October, China's crude steel production witnessed a 12% year-on-year decline, resulting in a 4% decrease from the start of the year. This marked the lowest production for the month since 2021. This outcome aligns with China's previous commitments to impose production caps on industries plagued by overcapacity, aiming to mitigate the competitive downfall among smelters and the ensuing deflationary tendencies. Subsequently, steel exports declined by 12.5% compared to the previous year, reaching 978.2 million tonnes in October. This was the first drop recorded this year, highlighting the effects of protectionist measures from buyers in Southeast Asia and Latin America, which have compelled domestic mills to reduce their reliance on international customers. Meanwhile, domestic demand for rebar in China remains subdued, as evidenced by the official construction Purchasing Managers' Index (PMI), which plummeted to an unprecedented low in October.