FX.co ★ Steel Inches Lower from 6-Week High

Steel rebar futures dipped to CNY 3,090 per tonne, slightly retreating from the six-week peak of CNY 3,135 observed on May 13th. This decline comes amidst mixed signals regarding the future demand for rebar in China, the world's leading consumer. The Chinese government suggested it would amend laws to ban the sale of homes before completion. Such a measure could eliminate a critical financing source for major property developers, escalating financial pressures in the heavily indebted sector, and subsequently curbing steel demand from significant purchasers. This development runs counter to reports that Beijing plans to reduce steel output quotas this year due to waning housing demand and the threat of protectionist trade measures exacerbating the negative effects of overcapacity in the industry. This speculation was reinforced by Boasteel's announcement that capacity cuts will reduce output by 50 million tonnes this year. Meanwhile, recent data indicated that China's steel output for April remained steady compared to the previous year, standing at 2.6 million tonnes.