Steel rebar futures fell to CNY 3,225 per tonne, down from the one-month high of CNY 3,310 reached on February 20th, as markets reassessed the impact of rising protectionist policies targeting China and their potential effects on foreign demand.
Steel pulls back from one-month high
Vietnam’s decision to impose tariffs on Chinese hot-rolled coils adds to a growing list of protectionist measures, following similar tariffs from the US, along with signals from South Korea and Brazil, all of which are taking steps to protect their domestic steel industries. These measures threaten to exacerbate the global supply chain disruptions, which are especially significant for a major exporter like China.
Ferrous metal demand slows in China
China, facing a slowing ferrous metal demand amid its ongoing housing crisis and waning manufacturing activity, has increasingly relied on exports to meet demand and absorb its growing steel production capacity. This shift toward international markets has led to a remarkable surge in steel shipments, which soared by 26% in December 2024, hitting a record high of 9.7 million tons. However, with the protectionist tariffs being implemented globally, there are concerns about how sustainable this export-driven growth will be for China’s steel sector.
Steel futures are up 5% year-to-date
Despite these pressures, steel futures are up 5% year-to-date, driven by expectations that government support could help stabilize the market and stem the decline in housing demand. The Chinese government has made moves to buoy the struggling real estate sector, which has direct implications for steel demand, especially in construction. Local authorities have pledged to support major developers like Vanke by purchasing a portion of their housing and land inventory, one of the most ambitious support measures yet. This signals the government’s reluctance to allow major developers to be liquidated, and there is hope that such intervention may eventually help lift construction activity, thereby providing a boost to steel demand. However, the market remains cautious, as the ongoing effects of global trade barriers and domestic challenges still cloud the outlook for the steel industry.
