FX.co ★ Steel Declines to 7-Month Low

In April, steel rebar futures in China declined to CNY 3,020 per tonne, marking the lowest level in seven months. This drop is attributed to robust supply dynamics coupled with an uncertain outlook for demand. The ongoing trade war between China and the United States has notably dampened expectations for manufacturing demand within China. This situation has negatively impacted growth projections and heightened concerns that the country's property crisis is far from reaching its nadir. Persistent fears over declining property prices, fueled by weak consumer demand, continue to exert pressure on the balance sheets of heavily indebted developers. This scenario poses a risk of liquidation and potentially eliminates a significant source of global rebar demand. Previously, diminished demand and rising trade protectionist measures prompted Beijing to hint at capacity reductions in the steel sector. However, recent data indicates that steel mills are still producing at an increased rate. Specifically, China's crude steel output saw a 3.6% annual increase, reaching 93 million tons in March.