FX.co ★ Steel Holds Near 9-Month Low

Steel rebar futures in China have stabilized around CNY 2,950 per tonne, maintaining a narrow trading band since they hit a nine-month low of CNY 2,920 on June 13th. This stabilization reflects a balance where declining ferrous metal demand and growing protectionism against Chinese steel offset the effects of reduced supply. In May, China's construction growth, as gauged by the National Bureau of Statistics Purchasing Managers' Index (NBS PMI), declined to a four-month low. This downturn was driven by US tariff threats dampening consumption and a surplus of housing stock reducing the demand for new residential developments, exacerbated further by the typically slower summer season. Additionally, the US has increased tariffs on steel imports to 50%, putting pressure on import demand and increasing the availability of ferrous metal across major Asian markets. In response, Beijing has indicated plans to reduce steel production capacity this year, with Baosteel anticipating a production decline of 50 million tonnes. Concurrently, iron ore exports from Australia's Port Hedland surged in May, recovering from earlier supply disruptions caused by adverse weather conditions.