Steel Nears 2-Week Low

Steel rebar futures in China dropped below CNY 3,100 per ton, approaching two-week lows as persistent weakness in demand continued to pressure the market, while disappointing economic data from top consumer China further clouded the demand outlook. Industrial profits in China slowed in August as subdued domestic demand offset strength in high-tech and AI-related manufacturing. Meanwhile, profitability at Chinese steel mills declined again last week, while average daily hot metal production also fell. The China Iron and Steel Association has called on mills to reduce output and draw down inventories to protect margins and curb excess supply. Additionally, data from the World Steel Association showed global crude steel production fell 1.2% to 144.2 million tons in August compared with the same month a year earlier.

Steel rebar futures fell toward CNY 3,100 per tonne from the two-week high of CNY 3,130 on September 16th amid lower iron ore prices and downside risks on demand. The property crisis in top steel consumer China continued to prevent significant demand growth for rebar. Housing prices fell 3% annually in August as existing home sales took the majority of home sales in the country on a year-to-date basis, reflecting the government's effort to cap the oversupply of residential properties. The developments limit steel buying from major developers in the country, among the main buyers of rebar in the world. Consistently, the official construction PMI in China fell to a record low of 46.9. Elsewhere, a group of trade finance firms accused trader Radiant World of fraudulent invoices to back receivables, driving ore prices to fall sharply as trade finance liquidity dried.

Steel rebar futures held above CNY 3,100 per ton, hovering near multi-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.