Steel Rises Despite Weak Chinese Trade Figures

Steel rebar futures climbed above CNY 3,100 per ton, reaching a one-month high even as the latest Chinese trade data showed that steel exports fell 5.6% year-on-year to 57.87 million tons in the first half of the year. In June alone, exports totaled 10.32 million tons, down 0.2% from the previous month but up 6.6% compared with a year earlier. Meanwhile, China’s steel imports reached 2.69 million tons in January-June, marking an 11.3% decline from the same period last year. At the same time, Chinese steel mills reported widening losses as elevated coking coal costs and persistently weak finished steel prices continued to squeeze profit margins. Planned maintenance work and production cutbacks are also expected to curb near-term steel output.

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.