FX.co ★ Steel Holds Near 9-Month Low

As of Wednesday, steel rebar futures in China remained steady at approximately CNY 2,950 per tonne. This figure has hovered within a narrow range after hitting a nine-month low of CNY 2,920 two days earlier. The market continues to feel the effects of weak demand for ferrous metals and escalating protectionist measures targeting Chinese steel, which overshadow the potential benefit of a decrease in supply. Construction growth in China, as indicated by the National Bureau of Statistics (NBS) Purchasing Managers' Index (PMI), dropped to its lowest point in four months. This decline is attributed to tariff threats from the United States, which have curbed consumption. Additionally, an oversupply of housing stock has reduced the necessity for new residential developments, amplifying the typical reduction in activity during the summer months. Moreover, the U.S. has doubled tariffs on steel imports, raising them to 50%, thereby suppressing import demand and increasing the availability of ferrous metals in major Asian markets. In response, the Chinese government has hinted at plans to reduce steel production capacity this year. Baosteel, a leading steel manufacturer, has announced expectations to cut production by 50 million tonnes.