Steel Rebounds as China Production Resumes

Steel rebar futures climbed above CNY 3,060 per ton in late February, rebounding from multi-month lows as economic activity in China accelerated following the extended Lunar New Year holiday, with mills expected to ramp up production. However, analysts anticipate that China’s steel demand will weaken in the first half of the year, potentially constraining the durability of the rebound. The steel industry may also be concerned that the US Supreme Court’s ruling on tariffs may trigger further protectionist measures given robust Chinese steel exports last year. Still, China is expected to face lower average duties on its metal-intensive exports following the court’s decision, potentially boosting exports. On the policy front, the People's Bank of China kept its benchmark lending rates unchanged for a ninth straight month, offering limited fresh stimulus to the domestic steel market.

Steel rebar futures slid below CNY 3,040 per ton in late February, touching their weakest levels since early November as mainland China markets reopened after the long Lunar New Year break. Demand for the key construction material is expected to gradually recover as economic activity gains traction post-holidays. During the break, Chinese mills suspended production, with both blast furnaces and electric arc furnaces undergoing scheduled maintenance. The People’s Bank of China left its benchmark lending rates unchanged for the ninth consecutive month, offering little fresh stimulus to the market. Traders also weighed the implications of potentially lower US levies after the US Supreme Court struck down President Donald Trump’s reciprocal tariffs. Even with Trump threatening to raise global tariffs from 10% to 15% in response to the ruling, China is still expected to face lower average duties on its metal-intensive exports.

Steel rebar futures steadied above CNY 3,050 per ton in mid-February, but remained close to three-month lows as trading in mainland China paused for the Lunar New Year holiday from Feb. 16 to 23. Chinese mills scaled back operations amid a seasonal slowdown, with both blast furnaces and electric arc furnaces undergoing scheduled maintenance. Heavy air pollution alerts in parts of Hebei have also raised the likelihood of temporary output restrictions. Meanwhile, data from the World Steel Association indicated that global steel production declined in 2025, largely due to output cuts in China under its anti-involution campaign. China remained the world’s largest steel producer, with output totaling 960.8 Mt. last year, followed by India, the US, Japan, and Russia, which together produced 395.4 Mt.