Steel Pulls Back on Demand Uncertainty

Steel rebar futures fell to around CNY 3,100 per ton in early September, pulling back from multi-month highs as surging oil prices heightened inflationary risks and reinforced expectations of imminent interest rate hikes, weighing on the demand outlook. Higher rates could eventually slow global economic growth, dampening demand for industrial metals. Meanwhile, steel prices rallied sharply in August as investors anticipated a recovery in demand due to seasonal factors ahead of the September peak construction season. China’s National Development and Reform Commission also reportedly held meetings in recent weeks, urging local governments to accelerate the construction of major projects. However, 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.

Steel rebar futures jumped above CNY 3,130 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.