FX.co ★ Steel Surges to 4-Month High

In July, steel futures in China climbed to CNY 3,170 per tonne, marking the highest level in over three months. This rise can be attributed to expectations of reduced steel output and governmental investment in construction, which helped mitigate concerns about a surplus in the steel market. Chinese policymakers have committed to reforming industrial policies to address overcapacity, a move that is expected to benefit furnace and mill margins. This comes in the context of China's ongoing property crisis and the increasing trend of protectionist trade measures from major steel-importing countries, both of which have dampened demand. Earlier, leading producer Baosteel projected a national output decline of 50 million tonnes for the year. Additionally, steel prices received a boost from the announcement of a CNY 1.2 trillion hydropower plant project. This initiative not only supports the demand for ferrous metals but also indicates the Chinese government's strategy of leveraging infrastructure projects to stimulate its slowing economy and mitigate the effects of the property crisis.