Steel Rises on Supply Disruptions

Steel rebar futures rose toward CNY 3,140 per ton, recouping losses from last week as supply constraints linked to the Iran war lifted fuel and shipping costs, keeping a risk premium on prices. Israel also struck two major steel factories in Iran reportedly tied to the IRGC, adding further complexity to the global steel market. In China, recent data showed steel production fell 3.6% to 76.1 million tons in February, while global output declined 2.2% to 141.8 million tons. During the annual parliamentary sessions in Beijing earlier this month, authorities reaffirmed their commitment to reducing overcapacity in the steel sector amid weakening demand. China’s steel industry continues to face structural headwinds as the economy matures, with softer construction activity further pressured by the prolonged property downturn.

Steel rebar futures fell below CNY 3,130 per ton, hitting a two-week low as China’s key steelmaking hub of Tangshan activated a level-two emergency response to heavy air pollution, raising concerns over potential output curbs and tighter environmental inspections. Industry data also showed Chinese steel production declined 3.6% to 76.1 million tons in February, while global output fell 2.2% to 141.8 million tons. During the annual parliamentary sessions in Beijing earlier this month, authorities reaffirmed their commitment to reducing overcapacity in the steel sector amid weakening demand. China’s steel industry continues to face structural headwinds as the economy matures, with softer construction activity further weighed down by the prolonged property downturn. Total output dropped below 1 billion tons last year for the first time since 2019.

Steel rebar futures climbed to around CNY 3,150 per ton, nearing their highest levels since August last year as China moved to curb overcapacity amid weak demand. Higher raw material costs, driven by rising ocean freight rates and elevated energy prices from the Iran war, have also squeezed steel mill margins, prompting production cuts. Recent data showed Chinese steel output fell 3.6% to about 160 million tons in the first two months of the year, reflecting both a seasonal slowdown tied to the Lunar New Year holiday and pollution controls ahead of March’s annual legislative meetings. China’s steel sector remains in structural decline as the economy matures, leading to weaker construction activity, further exacerbated by the prolonged property crisis. The country’s steel output dropped below 1 billion tons last year for the first time since 2019.