Steel Firms Up as China as China Tackles Overcapacity

Steel rebar futures dropped toward CNY 3,070 per ton, approaching two-month lows after the World Steel Association revised its outlook, projecting global steel demand to contract by 0.1% this year, compared with its previous forecast of 0.3% growth in April. The industry group cited weakening demand in China and disruptions caused by the Middle East conflict, noting that the anticipated recovery has been slower and more gradual than initially expected. It also lowered its 2027 demand growth forecast to 1.7% from 2.2%. According to the report, steel demand in China is expected to decline by 2% this year as the property downturn persists longer than previously anticipated. Europe’s outlook has also weakened, with the construction recovery proving slower and more uneven. Meanwhile, India remains the fastest-growing major steel market globally, with demand projected to expand by 7.9% in 2026 and 8% in 2027.

Steel rebar futures traded near CNY 3,100 per ton, finding support as falling spot coke prices helped reduce steelmakers’ losses, improving the sector’s outlook and potentially easing pressure to cut production. Meanwhile, China intensified efforts to support its economy amid weak consumption and investment, allocating CNY 550 billion ($82 billion) in unused government debt quotas to strengthen local government finances and expand infrastructure spending. However, the steel industry continued to face subdued demand amid a prolonged property market downturn and sluggish construction activity. Recent data showed that only 6.9% of Chinese steelmakers were profitable at the end of September, highlighting persistent challenges across the sector. Steel producers remain under pressure to curb output as shrinking profit margins and uncertain demand continue to weigh on prices.

Steel rebar futures slipped below CNY 3,090 per ton, reaching their lowest level in four weeks as Chinese markets reopened following a week-long holiday, with the industry continuing to grapple with deteriorating steel margins. Industry data showed that only 6.9% of Chinese steelmakers were profitable by the end of September, while average daily hot metal production declined to a six-month low of 2.34 million tons. Reports also indicated that some Chinese steelmakers had begun or were planning equipment maintenance as mounting losses continued to pressure operations. In addition, China’s steel industry faced persistently weak demand amid a prolonged property downturn and subdued construction activity. Meanwhile, data from the World Steel Association showed that global crude steel production declined 1.2% year-on-year to 144.2 million tons in August.