FX.co ★ Steel Hovers at 4-Month High

In July, steel futures in China climbed to CNY 3,280 per tonne, even after adjusting for a slight dip, marking a 10% increase since the month's outset—the highest level since March. This surge is largely attributed to the anticipation of reduced production and an uptick in demand. Chinese authorities have committed to overhauling industrial policies to bolster their dedication to mitigating overcapacity, a move that stands to improve profitability for steel manufacturers. This comes in response to the ongoing property crisis in China and increasing protectionist trade approaches from major steel-importing nations, both of which have undercut demand. In a related note, Baosteel, a leading steel producer, has projected a national output reduction of 50 million tonnes for this year. Meanwhile, the market has found support from the proposed CNY 1.2 trillion hydropower plant initiative, which not only bolsters demand for ferrous metals but also signals the Chinese government’s intent to leverage infrastructure projects to revitalize its decelerating economy and mitigate the adverse effects of the property downturn.