FX.co ★ Stell Hovers Near 5-Month Low

Steel rebar futures in China hovered around CNY 2,950 per tonne on Tuesday, remaining within a narrow range after reaching a nine-month low of CNY 2,920 two sessions earlier. This stagnation is attributed to weak demand for ferrous metals and growing protectionism against Chinese steel, which have overshadowed expectations of reduced supply. China's construction growth, as indicated by the NBS Purchasing Managers' Index (PMI), dropped to a four-month low in May. This decline was primarily due to tariff threats from the United States, limiting consumption, along with an overabundance of housing stock that reduced the necessity for new residential projects. This scenario was exacerbated by the typically slower pace of construction during the summer months. Further compounding these issues, the US increased tariffs on steel imports to 50%, suppressing import demand and boosting the availability of ferrous metals in major Asian markets. In response, Beijing announced plans to reduce steel furnace and mill capacities this year, with Baosteel predicting a production decrease of 50 million tonnes.