Steel Hits 2-½-Month Highs

Steel rebar futures jumped above CNY 3,140 per ton, reaching their highest levels since mid-June as investors anticipated a recovery in demand due to seasonal factors ahead of the September peak construction season. Construction activity in top consumer China typically picks up ahead of winter, strengthening the outlook for demand for steel and raw materials. China’s National Development and Reform Commission also reportedly held meetings in recent weeks urging local governments to accelerate the construction of major projects. Meanwhile, China’s non-manufacturing PMI, which covers services and construction, held steady at 49.0, matching July’s reading and remaining at its weakest level since December 2022. Sweeping regulatory changes for China’s crisis-hit property sector announced last week also drove shares in smaller developers sharply lower, amid expectations of further consolidation across the industry.

Steel rebar futures climbed above CNY 3,100 per ton, reaching over one-month highs on hopes for stronger demand in top consumer China ahead of the September peak construction season, while Beijing unveiled fresh policy support. Markets are anticipating a pickup in demand as construction activity accelerates ahead of winter. China will also introduce a new package of measures to expand domestic demand and support economic growth, according to Vice Finance Minister Liao Min. Additionally, China’s National Development and Reform Commission reportedly held consecutive meetings last week urging local governments to accelerate the construction of major projects. Meanwhile, industry data showed that China’s total steel exports rose 10.7% week-on-week to 2.36 million tons in the week through August 24, marking the fastest weekly increase in nearly five weeks as the impact of Typhoon Dolphin subsided. However, China’s property market has remained in a prolonged slump for five years now.

Steel rebar futures fell to around CNY 3,070, retreating from multi-week highs to four-week lows as weak construction activity and elevated rebar inventories continued to weigh on sentiment. China’s property market remained under pressure, with new home prices falling year-on-year in July, while rebar stockpiles stayed above year-ago levels. Weak mill profitability also limited buying appetite, with only about one-third of steelmakers profitable at the end of July. However, improving blast-furnace operating rates and expectations of seasonal restocking ahead of the September peak construction season offered some support. Beijing also signalled further measures to boost domestic demand, while the NDRC urged local governments to accelerate major projects, raising hopes for a gradual improvement in steel consumption.