FX.co ★ Steel Declines Toward 8-Month Low

Steel rebar futures dipped to CNY 3,020 per tonne in late May, reaching an eight-month low. This decline aligns with the downturn in ferrous metals, as a gloomy outlook for demand overshadowed potential supply cutbacks. The Chinese government has announced plans to reform legislation to ban the sale of homes prior to their completion. Such a move would eliminate a significant financing channel for major property developers, heightening financial strain on this heavily indebted sector and suppressing steel demand from key purchasers. Furthermore, anti-dumping investigations by top steel-importing nations, including South Korea, Vietnam, Brazil, Mexico, and South Africa, are likely to suppress foreign demand. Exports have been a crucial outlet for Chinese steel mills, especially as slowed domestic demand has prompted producers to look abroad to achieve their sales goals. In response, industry groups have supported Beijing's stance on introducing a steel output mandate, with Baosteel suggesting a national output reduction of 50 million tonnes for the current year.