Steel rebar futures in China rose to CNY 3,095 per tonne, the highest in one month, after hovering near seven-month lows of CNY 3,020 since late April.
Steel rises to one-month high
The rebound was driven by growing expectations of lower domestic supply amid reports that major steel producers—including industry giant Baosteel—have received unofficial guidance suggesting Beijing may soon impose nationwide output restrictions. The move is part of a broader effort to address chronic overcapacity in the steel sector and to align production with declining domestic demand, which has been further dampened by the ongoing US-China trade conflict. While the central government has yet to formally announce the scale of production limits, early estimates suggest that steel output could be cut by as much as 50 million tonnes this year.
The potential supply squeeze follows a wave of disappointing economic data. China's National Bureau of Statistics (NBS) reported that the official manufacturing PMI contracted unexpectedly in April, with export orders falling to their lowest level in over two years amid rising trade tensions. The latest tariff escalation between Beijing and Washington has dealt a fresh blow to Chinese industrial exports, raising fears of a prolonged downturn in global trade flows. These headwinds have added urgency to Beijing’s push to stabilize key industrial sectors while managing surplus production.
Weakness in China property market continues
Adding to concerns is the continued weakness in China’s property market, a key pillar of steel rebar demand. Poor consumer sentiment and tighter financing conditions have kept housing prices under pressure, with developers struggling to generate cash flow. Analysts warn that mounting debt and liquidity constraints could trigger a new wave of defaults and liquidations among smaller property firms, further reducing demand for construction materials such as rebar. Since real estate typically accounts for a significant share of China’s steel consumption, any prolonged downturn in the sector could have cascading effects across the global steel supply chain.
Outside China, the outlook for rebar is also being shaped by broader shifts in international trade dynamics. Several countries, including the United States and members of the European Union, are reportedly evaluating import restrictions on steel products to shield their domestic industries from cheaper Chinese exports, which may rise if domestic demand continues to falter despite supply cuts. This has injected additional volatility into global steel markets, with prices reacting sharply to both policy developments and changes in sentiment around infrastructure and construction demand.
Looking forward, investors will be watching closely for any formal announcement from Beijing regarding production curbs, as well as for signs of stabilization in property prices or new stimulus measures that could support construction activity. Until then, steel rebar prices are likely to remain sensitive to policy rumors, trade risks, and any shifts in demand from downstream industries.
