Steel Firms Despite Weak Demand

Steel rebar futures hovered around CNY 3,090 per ton, recovering after recent losses as higher iron ore prices and improving sentiment toward China's steel sector supported the market. Confidence was underpinned by resilient crude steel production, which averaged 2.79 million tons per day in June, the highest since March, while strong iron ore imports and expectations of additional policy stimulus from Beijing also buoyed sentiment. However, gains remained capped by persistent weakness in China's property sector, with first-half real estate investment falling 18% year-on-year and construction starts declining 23.4%. Persistent high temperatures and frequent rainfall across parts of China also continued to disrupt outdoor construction activity, keeping demand for construction steel subdued.

Steel rebar futures fell to around CNY 3,070 per ton, hitting a one-week low as seasonal weakness in Chinese demand and softer mill profitability weighed on sentiment. Persistent rainfall across southern China and high temperatures in the north continued to hamper construction activity, reducing steel consumption. Industry data also showed blast furnace capacity utilization at surveyed steel mills slipped below 90% last week, while mill profitability eased to around 37%. Meanwhile, recent Chinese trade data showed steel exports declined 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 6.6% higher than a year earlier. Additionally, China's steel imports reached 2.69 million tons in January-June, marking an 11.3% decline from the same period last year.

Steel rebar futures climbed above CNY 3,120 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.