Steel Firms Up on Output Curb Pledge

Steel rebar futures held above CNY 3,120 per ton, remaining near two-month highs as several Chinese steelmakers pledged to curb production and reduce steel inventories amid sharply declining margins. The state-backed China Iron and Steel Association, together with 45 major steelmakers including China Baowu Steel Group, urged domestic producers across the industry to firmly implement output controls to bring down elevated inventory levels. Profitability at Chinese steelmakers deteriorated sharply, pressured by high production costs and weak steel demand. As a result, some producers have reduced operations and scheduled maintenance. Recent data also showed that China’s new home prices continued to fall in August, underscoring the persistent drag from the country’s prolonged property downturn.

Steel rebar futures rose above CNY 3,130 per ton, hitting two-week high even as weak market fundamentals continued to weigh on the broader market. Elevated coke prices continued to squeeze steelmakers’ profit margins, prompting some producers to scale back operations and undergo maintenance. Industry data showed that steel mill profitability in China fell sharply to 7.79% in the latest week. Chinese steel demand also weakened further in the third quarter amid a continued slowdown in construction activity. Data showed that China’s new home prices extended their declines in August, highlighting the persistent drag from the country’s prolonged property downturn. Meanwhile, China’s leading industry association reportedly urged steelmakers last month to voluntarily reduce output, aiming to lower inventories and restore profitability following a challenging first half.

Steel rebar futures slipped toward CNY 3,060 per ton, reaching a three-week low as worsening profitability across China’s steel sector weighed on sentiment. Industry data showed that steel mill profitability in China dropped sharply to 7.79% in the latest week, as persistently high coke prices continued to squeeze margins. Chinese steel demand also weakened further in the third quarter amid an ongoing slowdown in construction activity, while overseas steel demand remained relatively resilient but showed signs of a delayed recovery. Meanwhile, China’s leading industry association reportedly called on steelmakers last month to voluntarily curb output, with the aim of reducing inventories and restoring profitability after a challenging first half. However, analysts see limited willingness among mills to implement substantial production cuts, particularly as steel demand shows signs of stabilizing.