Steel rebar futures fell to CNY 3,200 per tonne in March, marking the lowest level in one month, as pessimistic economic data from China amplified the impact of softer-than-expected output cuts for the year.
Steel falls to one-month low
The decline in futures was driven by concerns about weak demand and rising oversupply in the domestic market. Consumer and producer prices in China fell more than expected in February, highlighting the ongoing struggle with sluggish demand for manufactured goods despite stronger credit aggregates from the previous month. The sharp drop in prices indicated that the underlying demand for steel and other industrial materials remained subdued, which, combined with lower-than-expected output cuts, contributed to the bearish sentiment in the steel market.
China pushes on steel production
Meanwhile, the Chinese government announced plans to promote a restructuring of domestic steel production to prevent further oversupply, but the lack of specific details on the extent of these changes raised significant uncertainty. Early speculation had suggested that up to 50 million tons of annual steel production could be slashed as part of efforts to reduce excess capacity and stabilize the market. However, the government's more vague statement on restructuring left investors unsure of how aggressively these cuts would be implemented, leading to further skepticism in the market. The lack of clarity surrounding the capacity reduction measures added to the pressure on steel rebar futures, as traders struggled to assess the potential long-term impacts on supply-demand dynamics.
Chinese exports grew in first two months of 2025
In addition to domestic factors, China’s steel exports continued to show resilience, growing nearly 7% in the first two months of the year to reach 17 million tons. This growth in exports occurred despite rising protectionist measures from key trading partners. Vietnam raised its anti-dumping duties on Chinese steel, and other countries like South Korea, Brazil, and Chile have pledged similar actions to curb steel imports from China. These measures, aimed at protecting local industries from cheap Chinese imports, added to the complexity of the global steel market. While Chinese exports remained strong, the rising trade barriers highlighted the challenges facing Chinese steel producers in maintaining access to international markets. As the market adjusts to these factors, steel rebar futures are likely to remain volatile, with ongoing concerns about domestic demand and global trade dynamics continuing to influence pricing.
