Steel Extends Decline on Demand Worries

Steel rebar futures fell to around CNY 3,180 per ton, reaching their lowest levels in nearly three weeks as signs of slowing economic activity in top consumer China weighed on the outlook for steel demand. Data released earlier this week showed that China’s retail sales and industrial production both missed expectations, while fixed asset investment unexpectedly contracted amid the impact of the global energy crisis on businesses and consumers worldwide. Domestic steel consumption in China also remained under pressure from sluggish construction activity, while demand for Chinese steel exports weakened as overseas buyers showed limited appetite for purchases at elevated prices. Meanwhile, Mysteel’s latest monthly industry report indicated that long steel output is likely to increase as improved profit margins encourage domestic steelmakers to ramp up production, potentially creating additional downward pressure later this month as end-user demand softens.

Steel rebar futures fell below CNY 3,200 per ton, pulling back from nine-month highs as expectations of a seasonal slowdown in demand and softer downstream consumption weighed on the market. Mysteel’s latest monthly industry report indicated that construction steel prices in China are likely to face pressure this month due to weakening supply-demand fundamentals. The report also noted that long steel output is expected to increase as improving profit margins encourage domestic steelmakers to raise production, potentially adding downward pressure later in the month as end-user demand weakens, particularly in southern China during the wet season. Still, stronger-than-expected economic data from China provided some support to sentiment, with exports surging to a record high in April as companies accelerated stockpiling of components amid concerns that the Iran conflict could further raise input costs.

Steel rebar futures climbed toward CNY 3,250 per ton, approaching their highest level since July last year as expectations for stronger demand supported the market. Steel production in China remained stable, while improved profit margins at mills encouraged firmer output and boosted sentiment across the sector. Stronger-than-expected economic data from China also underpinned prices, with exports surging to a record high in April as companies accelerated stockpiling of components from the manufacturing hub amid concerns that the Iran conflict could drive input costs even higher. In addition, China’s consumer inflation exceeded forecasts, while producer prices recorded their strongest increase in nearly four years, pointing to a continued recovery from the deflationary pressures that weighed on the economy in recent months. Still, analysts warned that the approaching seasonal slowdown in steel demand and softer downstream consumption could cap further upside in steel prices.