Steel Rises to 2-Week High

Steel rebar futures were at CNY 3,190 per tonne in June, their highest in two weeks to sustain an over 3% increase since the start of the year as aggressive stimulus measures by the Chinese government supported expectations on demand. Major ratings houses noted they expect home prices in China to halt their decline by next year, reflecting the bottom of a major source of rebar consumption globally. The signals are consistent with measures taken by local governments to boost property buying, with the Shenzhen area easing restrictions on home buying and Guangzhou increasing subsidies. Infrastructure spending is also due to support ferrous metal buying, including Beijing's push to set up industrial and commercial hubs in Western China. On the supply front, domestic steel output eased by 2.8% annually to 83.6 million tons, the lowest amount for the month since 2018.

Steel rebar futures held below CNY 3,190 per ton, hovering near their lowest level in a month as weak demand continued to weigh on prices. Steel margins in China remain under pressure amid persistent weakness in the country’s infrastructure and property construction sectors. Demand for Chinese steel exports has also softened, with overseas buyers showing limited appetite for purchases at elevated prices. China’s steel output declined 2.8% year-on-year to 86.63 million tons in April, marking the weakest April reading since 2018. Meanwhile, the latest monthly industry report from Mysteel indicated that long steel production is expected to increase as improved profitability encourages domestic steelmakers to raise output. However, the prospect of higher supply could create additional downward pressure later this month if end-user demand continues to deteriorate.

Steel rebar futures climbed above CNY 3,200 per ton, recovering from three-week lows as global steel production declined in April at a slower pace than in March, with the contraction in China’s steel output also easing. The data helped support market sentiment, though broader demand conditions remained mixed. Steel margins in China continue to face pressure amid persistent weakness in the country’s infrastructure and property construction sectors. Demand for Chinese steel exports has also softened, with overseas buyers showing limited willingness to purchase at elevated prices. Meanwhile, Mysteel’s latest monthly industry report indicated that long steel production is expected to rise as improved profitability encourages domestic steelmakers to increase output. However, the prospect of higher supply could add fresh downward pressure later this month if end-user demand continues to weaken.