Steel rebar futures hovered around CNY 3,200 per ton in late March, lingering near an 11-week low as fears of an escalating global trade war kept investors cautious.
Steel prices subdued amid trade war concerns
US President Donald Trump’s reciprocal tariffs, set to take effect next week, will add to the existing 20% levies already imposed on Chinese goods, further fueling uncertainty in the market. The looming tariff hikes have raised concerns about the potential disruption in global trade flows, especially in the steel industry, which is highly sensitive to such developments. As a result, investors have been adopting a more cautious stance, awaiting clarity on the broader economic impact of these trade policies.
Chinese officials have pledged stronger policy
In response to the growing trade pressures, Chinese officials have pledged stronger policy support to shield the economy from the adverse effects of the tariffs. The government is likely to implement targeted measures aimed at minimizing the damage to key sectors, including steel, which plays a crucial role in the country's industrial base. Despite the escalating trade tensions, steel prices have remained relatively supported by robust domestic demand in China, the world's largest consumer of steel. This sustained demand is helping to stabilize prices, even as external challenges mount.
Chinese producers increase output
Moreover, independent electric-arc-furnace (EAF) steelmakers in China have ramped up production for the sixth consecutive week, pushing capacity utilization to 54.9%, its highest level since June 2024. This increase in output highlights the ongoing strength in the domestic steel market, with EAF steelmakers capitalizing on favorable conditions in the local market despite global trade uncertainties. At the same time, China is advancing plans to restructure its massive steel sector, focusing on reducing inefficient capacity and improving overall industry competitiveness. As part of these plans, the government is considering compensation funds to help phase out outdated capacity, but no firm reduction targets have been set yet, adding an element of uncertainty about the long-term trajectory of the sector. The steel market remains in a state of flux, with global trade concerns, domestic demand factors, and restructuring efforts all playing pivotal roles in shaping future price movements.
