FX.co ★ Steel Rebounds from 9-Month Low

Steel futures in China climbed to over CNY 3,040 per tonne, marking a recovery from their near nine-month lows of approximately CNY 2,940 observed throughout June. This rebound is primarily driven by mounting expectations of impending supply restrictions. Recent reports suggest that the Chinese government is poised to limit steel capacity for the year following indications from key policy discussions. Policymakers have emphasized the necessity of addressing the oversupply issue within the domestic steel market as demand weakens and export prospects dim due to global protectionist measures. Notably, Baosteel has projected a production decrease of 50 million tonnes this year. Further supporting the uptick, the construction PMI, as reported by the NBS, reached a three-month peak in June, surpassing other economic sectors. Nonetheless, the recovery was tempered by a surge in iron ore exports from Australia’s Port Hedland in May, following earlier disruptions caused by adverse weather conditions.