Steel rebar futures in China fell to CNY 3,040 per tonne, continuing to trade within a muted range after hitting a seven-month low of CNY 3,017 on April 22nd. This ongoing decline reflects the persistent pressures of ample supply in the market combined with uncertain demand.
Steel edges lower toward seven-month low
Despite some relief on the tariff front, with the US Presidential administration signaling a potential shift away from the aggressive tariffs previously imposed on Chinese goods, the situation remains tense. Both Beijing and Washington have clarified that no formal talks on tariff de-escalation have yet begun, dampening market hopes for a swift resolution. As a result, the prospects for a rapid cessation of tariffs remain unclear, and the continued uncertainty over trade relations has added to the lack of confidence in the broader economic recovery.
In China, the impact of tariffs on domestic consumer demand remains a significant concern. Lower consumption has exacerbated the ongoing slowdown in the property sector, which is heavily reliant on steel and construction materials. The risk of further declines in property prices continues to loom large, adding pressure on the balance sheets of debt-laden property developers. These developers are facing increasing financial strain, and some analysts are warning that the combination of weak demand and unsustainable debt levels could lead to further liquidations within the sector. This would have a broader impact on steel demand, particularly for rebar, as property developers are a key consumer of construction materials.
Chinese steel sector continues to grapple with the twin pressures
Compounding these challenges, the Chinese steel sector continues to grapple with the twin pressures of lower domestic demand and increasing trade protectionism. In response to these factors, Beijing had previously signaled that it might cut steel production capacity in an effort to stabilize the market. However, the latest data suggests that these efforts have not yet yielded significant results. In fact, crude steel output in China rose by 3.6% annually in March, reaching 93 million tons, reflecting that mills are still ramping up production despite the unfavorable market conditions. This overproduction, coupled with weak demand, continues to put downward pressure on prices as supply outstrips consumption.
In the context of these developments, the global rebar market faces an ongoing struggle with weak demand, trade restrictions, and overcapacity, creating a volatile environment for steel prices. While some analysts remain cautiously optimistic that a resolution to trade tensions could help revive demand in key sectors, the immediate outlook for the steel industry remains clouded by uncertainty.
