Steel rebar futures slipped to CNY 3,070 per tonne on Thursday, retreating from a one-month high of CNY 3,100 reached on May 7th, as renewed concerns over demand overshadowed expectations of tighter supply.
Steel pulls back from one-month high
The bearish sentiment was fueled by growing fears that China's housing market could face further strain, after reports surfaced that Beijing is considering sweeping changes to real estate laws that would prohibit the sale of homes before their completion. Such a move, if implemented, would eliminate a major cash flow mechanism for heavily indebted property developers, intensifying liquidity pressures across the sector. Since real estate construction accounts for a significant portion of China’s steel consumption—particularly rebar—the proposed policy could severely dampen demand in one of the world’s largest steel markets.
Possible tightening ahead
At the same time, supply-side factors pointed to possible tightening in the months ahead. Baosteel, one of China’s leading steelmakers, hinted that authorities in Beijing may soon mandate a nationwide reduction in steel output to address chronic overcapacity and align with weaker domestic and global demand. While specific targets have not been officially announced, industry sources suggest that steel production could be cut by as much as 50 million tonnes this year. This would mark one of the most significant interventions since the 2021 curbs aimed at meeting emissions targets.
What affects the market
Further compounding demand concerns, China’s National Bureau of Statistics reported that the official manufacturing PMI unexpectedly dropped in April, reflecting the sharpest contraction in new export orders in over two years. The decline was attributed in part to the escalating tariff standoff with the United States, which has dampened global trade flows and clouded the near-term outlook for industrial commodities. As a result, while supply cuts may provide some cushion for prices, sentiment in the steel market remains fragile, with investors closely watching both macroeconomic data and government policy for signs of stabilization.
