Steel Drops on Falling Mill Profits

Steel rebar futures fell back below CNY 3,060 per ton, retreating toward multi-month lows as widening losses at Chinese steel mills reinforced expectations of further production cuts. Steelmakers reported weaker profitability last week as elevated coking coal costs and persistently weak finished steel prices continued to squeeze margins. Planned maintenance and output reductions are also expected to weigh on near-term steel production. Separately, China launched a new mining investment vehicle, Guangyan International Investment Co., to strengthen the country's control over overseas mineral resources. The country is also seeking to standardize its framework for international metals deals to improve regulatory oversight and encourage mining companies to manage risks by partnering with other firms.

Steel rebar futures climbed above CNY 3,080 per ton, rebounding from eight-month lows as improving property demand in top consumer China lifted the outlook for steel consumption. Industry data showed that transactions of newly built commercial homes across 10 major Chinese cities increased 19.2% year-on-year in the week ended July 5. China’s warehousing index also returned to expansion territory in June, supported by stronger demand for bulk commodity storage as infrastructure projects gathered pace nationwide. On the supply side, a planned strike by BHP workers at the Port Hedland iron ore terminal in Western Australia raised the risk of disruptions to iron ore shipments, a key raw material for steel production. Meanwhile, state-backed China Mineral Resources Group Ltd. recently broadened restrictions on Australian miner Fortescue Ltd., adding further pressure to iron ore supply.

Steel rebar futures held below CNY 3,060 per ton, staying close to 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 July 1, 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.