Steel rebar futures eased to CNY 3,250 per tonne, down from the over one-month high of CNY 3,340 reached on March 3rd, as markets scaled back expectations regarding the magnitude of capacity cuts for the year.
Steel eases from one-month high
During its Two Sessions conferences, the Chinese government announced plans to promote a restructuring of domestic steel production in an effort to prevent oversupply. This move comes as China reduces new construction projects, and protectionist policies hinder the ability of domestic mills to export steel to foreign markets. Despite these efforts, the lack of detailed insights into the extent of the capacity cuts by the Chinese Communist Party (CCP) has dampened expectations for more aggressive production controls. Earlier speculation had suggested a potential reduction of 50 million tons in annual steel output, but the absence of clear commitments from the government has limited market optimism.
China's steel exports grew
Additionally, China's steel exports grew nearly 7% in the first two months of the year, reaching 17 million tons, indicating robust demand despite growing protectionist measures. Countries like Vietnam have already raised anti-dumping levies on Chinese steel, while South Korea, Brazil, and Chile have also pledged to introduce similar measures. These international trade barriers could further complicate China’s ability to export steel, making domestic production cuts even more critical for managing market balance. However, the continued rise in exports demonstrates that China’s steel sector remains competitive on the global stage, even in the face of mounting trade restrictions. The combination of domestic restructuring efforts and external trade tensions has left markets cautiously adjusting their expectations for the future of China's steel industry.
