FX.co ★ Steel Maintains Decline on Trade Worries

Steel rebar futures hovered around CNY 3,070 per tonne in April, marking a decline of over 7% for the year. This downward trend is largely attributed to the escalating trade tensions between China and the United States, which have negatively impacted the construction and manufacturing sectors in China, the world's largest consumer of ferrous metals. The United States has increased tariffs on Chinese goods to 125%, following China's move to impose 84% tariffs on US products. Although these US tariffs largely exclude steel, and steel trade between the two nations constitutes a minor segment of global transactions, the economic uncertainty from both countries has cast a shadow on the prospects for ferrous metal demand in China. Nevertheless, the effects of tariffs on Chinese steel have not been as severe as those on base metals, thanks to economic support measures from Beijing aimed at bolstering household consumption and safeguarding the financial stability of property developers. Additionally, Beijing has indicated its intention to enforce capacity reductions at steel mills in response to protectionist trade measures from Vietnam, South Korea, and Brazil.