Steel rebar futures eased to CNY 3,260 per tonne after Chinese commodity markets reopened following the Lunar New Year celebrations, marking the lowest level in three weeks.
Steel retreats after Lunar New Year
This decline was driven by uncertainty surrounding the demand outlook for ferrous metals, particularly as market participants remained cautious about the Chinese government's stimulus policies. While Beijing had previously announced plans to widen its budget deficit and implement aggressive stimulus packages in 2025, there has been a lack of tangible action, with muted spending by local governments fueling skepticism regarding public support for debt-ridden property developers, a major source of demand for rebar.
Bearish sentiment is growing
The latest official data added to the bearish sentiment, showing a sharp contraction in construction activity in January. The construction Purchasing Managers' Index (PMI) fell to a record low of 49.3, down from 53.2 the previous month, signaling a significant slowdown in the sector. This marked the first time the index dropped below the 50 threshold, which separates expansion from contraction, further weighing on expectations for rebar demand.
Trade war concerns continued to pressure the outlook
Moreover, concerns over a potential trade war continued to pressure the outlook for Chinese steel exports. Despite these challenges, China set a new record for steel exports in December, shipping out 9.7 million tons, a 26% annual increase. While this surge was notable, questions about the sustainability of these export levels persisted, especially in light of global trade tensions and the potential for protectionist measures in key markets.
As a result, the steel rebar market faces a complex set of headwinds, with weakened domestic demand, uncertain stimulus effectiveness, and geopolitical risks clouding the medium-term outlook for the sector.
