Steel rebar futures in China climbed above CNY 3,060 per tonne, staging a modest rebound after slumping to a seven-month low of CNY 3,017 on April 22nd.
Steel inches higher from seven-month low
The uptick followed a slightly more conciliatory tone from U.S. officials on trade tariffs, which temporarily soothed fears of an abrupt slowdown in Chinese economic growth. However, underlying concerns remain deeply rooted, particularly surrounding China's property market, which continues to grapple with weak consumer sentiment and persistent deflationary pressure in housing prices.
The prolonged property downturn has intensified financial strain on heavily indebted real estate developers, many of whom are now teetering on the brink of insolvency. These developers historically account for a large portion of domestic rebar demand, particularly for use in construction, and their potential collapse threatens to remove a key support pillar for China’s steel sector.
How China policies affect the steel market
Amid these headwinds, Beijing previously hinted at capacity reductions in steel production to stabilize prices and support industry profitability. Yet, recent figures tell a different story: crude steel output surged 3.6% year-over-year in March to reach 93 million tons, signaling that mills continue to ramp up production despite sluggish demand. This oversupply, combined with rising global trade protectionism, particularly from the U.S. and EU, could pose further challenges for Chinese steelmakers if export markets tighten.
Still, short-term gains in rebar futures suggest some speculative buying or short-covering activity, though analysts warn that without a meaningful recovery in property and infrastructure spending, price momentum is unlikely to sustain.
