Steel Rises Amid Falling Global Output

Steel rebar futures climbed to around CNY 3,109 per ton, reaching a one-week high after World Steel Association data showed global crude steel production fell 1.2% year-on-year to 144.2 million tons in August. On a monthly basis, global crude steel output also declined 3.3% from the 149.2 million tons produced in July, with China’s 2.3 million-ton month-on-month drop accounting for nearly half of the global decrease. Still, China remains the world’s largest steel producer, representing 51.7% of global output. Meanwhile, the Chinese steel industry continued to face weak demand and deteriorating mill profitability. The prolonged property downturn remained a major drag on rebar consumption, with new construction activity and demand from developers staying subdued. Chinese markets will be closed from October 1 to 7 for the weeklong National Day holiday.

Steel rebar futures in China fell below CNY 3,100 per ton, approaching two-week lows as weak demand continued to pressure the market. The prolonged property downturn remained a major drag on rebar consumption, with new construction and developer demand subdued. Chinese home prices fell 3% year-on-year in August, while existing homes accounted for most residential sales this year, reflecting efforts to reduce unsold properties and limiting the need for new construction. Meanwhile, profitability at Chinese steel mills deteriorated again last week, while average daily hot metal production declined, pointing to mounting pressure on producers. The China Iron and Steel Association urged mills to curb production and reduce inventories to protect margins and address excess supply. Data from the World Steel Association showed global crude steel production fell 1.2% year-on-year to 144.2 million tons in August.

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.