Steel rebar futures in China edged higher to over CNY 3,080 per tonne, rebounding from the seven-month low of CNY 3,017 touched on April 22nd, after the Chinese government signaled it would step up support for key export-oriented industries to cushion the blow from rising global trade protectionism.
Steel edges higher from seven-month low
Among the proposed measures were easier access to loans for troubled sectors and broader stimulus initiatives aimed at bolstering domestic consumption, although officials have yet to unveil detailed plans or timelines for implementation.
Previously, ferrous metals in China had come under sustained selling pressure as weak consumer demand, particularly in the housing market, raised fears that property prices could continue their downward trajectory. This, in turn, would strain the already fragile balance sheets of debt-laden property developers, increasing the risk of defaults and liquidations, and removing one of the steel sector's largest sources of domestic demand.
What affects the prices
The combination of weakening demand and escalating trade barriers had earlier prompted Beijing to signal intentions to cut steel production capacity in an effort to stabilize prices and support the sector. However, recent data pointed to the opposite trend, with Chinese mills continuing to increase output. Crude steel production rose by 3.6% year-on-year to 93 million tons in March, highlighting the challenge authorities face in balancing economic support with long-term restructuring goals. Analysts warned that without a significant pickup in demand, the current production levels could lead to a further accumulation of inventories, weighing on prices and margins across the supply chain.
