Steel Extends Decline Toward 8-Month Low

Steel rebar futures dropped below CNY 3,040 per ton on Wednesday, approaching their lowest levels in eight months as tighter European Union restrictions on steel imports darkened the demand outlook. The European Commission rolled out a revised safeguard mechanism that sharply curbs duty-free steel imports to shield the bloc’s steel industry and improve capacity utilization. Effective Wednesday, the EU reduced its annual tariff-free import quota by 47% to 18.3 million metric tons and imposed a 50% tariff on imports exceeding the quota across 26 steel product categories. Prices also remained under pressure from sluggish demand in top consumer China, where Zenith Steel lowered its early-July rebar prices, signaling weaker consumption as the prolonged downturn in the property market continued to weigh on construction activity.

Steel rebar futures fell below CNY 3,060 per ton, reaching their lowest level in four months as narrowing profit margins for steel mills and seasonal demand weakness weighed on prices. Industry data showed profitability among Chinese steel mills declined to about 51% in the latest week, down 4.8 percentage points from the previous week and 8.2 percentage points from a year earlier. The margin squeeze followed a fatal coal-mining accident in Shanxi last month, which drove up coke prices and encouraged mills to use more medium-to-high-grade iron ore to improve efficiency. Meanwhile, crude steel production in the world's largest producer continued to weaken amid the prolonged downturn in the property sector, with May output falling 2.7% year-on-year to 84.35 million tons.

Steel rebar futures fell below CNY 3,080 per ton, hitting their lowest level in more than two months as weak economic data from China dampened demand expectations. Crude steel production in the world's largest producer continued to weaken amid a prolonged downturn in the property sector, with May output falling 2.7% year-on-year to 84.35 million tons. Broader economic indicators also pointed to slowing momentum, with fixed-asset investment and consumer spending retreating to levels last seen during the pandemic period. Meanwhile, earlier data showed China's steel exports rose 8.8% in May from the previous month, supported by subdued domestic demand and stronger profit margins for overseas shipments. However, cumulative steel exports in the first five months of the year were still down 8.1% from a year earlier, reflecting rising trade barriers in several major export markets.