FX.co ★ Steel Rises to 7-Week High

In July, steel futures in China increased to CNY 3,090 per tonne, building on their recent upward trend amidst solidifying expectations that the Chinese government will enforce capacity reductions this year. Chinese policymakers have committed to reforming industrial policy to address the current steel market surplus. This policy reform could bolster profitability for steelmakers, as the ongoing property market crisis in China, coupled with increasing protectionist trade measures from significant steel-importing nations, has diminished demand. Earlier, Baosteel, a major steel producer, projected a national production decrease of 50 million tonnes this year. Further driving the price recovery, the construction Purchasing Managers' Index (PMI) reported by the National Bureau of Statistics (NBS) reached a three-month peak in June, surpassing performance in other economic sectors. However, the rebound faced constraints as iron ore exports from Australia's Port Hedland surged in May, following an earlier supply disruption due to adverse weather.