FX.co ★ Steel Extends Decline

Steel rebar futures declined to CNY 3,050 per tonne from a six-week peak of CNY 3,135 observed on May 13th, driven down by decreasing demand and potential trade barriers. The Chinese government indicated plans to revise legislation to prohibit the sale of homes before their completion. Should this be implemented, it would eliminate a significant financing avenue for prominent property developers, exacerbating financial pressures within a heavily indebted sector and thereby curbing demand for steel from major purchasers. Concurrently, data highlighted sustained weakness in housing demand due to a fragile consumer base, reflected in the housing price index declining for the 22nd consecutive month in April. Furthermore, anti-dumping investigations by key steel-importing countries—including South Korea, Vietnam, Brazil, Mexico, and South Africa—are expected to dampen foreign demand. For Chinese mills, exports have been a crucial channel for steel sales as domestic demand wanes, prompting producers to seek alternative markets to achieve their sales objectives.