Steel rebar futures edged higher to CNY 3,260 per tonne on Wednesday, paring losses from the previous session after Beijing signaled it may impose capacity constraints to align with climate goals.
Steel futures edges higher
This temporarily countered bearish pressure from growing protectionist trade policies that have dominated investor sentiment. Vietnam recently imposed tariffs on Chinese hot-rolled coils, in line with similar trade restrictions from the US, as well as looming levy signals from South Korea and Brazil. These measures reflect rising concerns over China’s steel export surge, which has been driven by slowing domestic demand amid the country’s prolonged housing crisis.
Chinese producers turn to exports
With a significant slowdown in domestic construction activity, Chinese steel producers have increasingly turned to exports to absorb excess capacity. Steel shipments soared 26% in December, reaching a record 9.7 million tons, as manufacturers sought to offset weak local demand. However, the global trade environment remains challenging, as more countries move to protect their domestic steel industries from an influx of cheap Chinese steel.
Outlook is positive
Despite these headwinds, fiscal support from the Chinese government has helped prevent further losses in steel prices. Local authorities have pledged to support Vanke, one of China’s largest property developers, by purchasing its housing and land inventory. This marks one of the most aggressive government interventions yet, signaling Beijing’s reluctance to allow major real estate firms to collapse. The move reflects broader efforts to stabilize the property sector, which remains a crucial driver of steel demand.
Looking ahead, traders will closely monitor any further government measures to support the real estate sector, as well as potential supply curbs from Beijing that could tighten steel markets. Additionally, the evolving global trade landscape, particularly in response to Chinese steel exports, will play a key role in shaping price movements in the coming months.
