Steel rebar futures remained below CNY 3,000 per tonne in early June, lingering near their lowest levels since September 2024, as persistently weak economic indicators from top consumer China continued to dampen demand expectations.
Steel pressured by weak China data
Investors remain concerned about the sustainability of construction and manufacturing activity in the world's second-largest economy, which is critical to global steel consumption.
Fresh trade data released last week showed that China’s export growth in May missed market forecasts, with a pronounced drop in shipments to the United States amid ongoing trade frictions. Meanwhile, imports contracted more than anticipated, further underscoring weak domestic demand and the absence of a strong post-pandemic recovery cycle. Adding to the bearish outlook, inflation indicators reinforced concerns about sluggish momentum. Consumer prices in China declined for the fourth consecutive month, while factory-gate prices fell to their lowest level in nearly two years, reflecting deep-rooted disinflationary pressures and subdued industrial activity.
While some market participants are hopeful that the resumption of US-China trade talks in London today could lead to de-escalation, sentiment remains cautious amid a broader climate of geopolitical and policy uncertainty. Many traders doubt that the talks will yield concrete outcomes in the near term, especially with both governments taking a more protectionist stance.
Trump effects on the market
Externally, global steel markets also faced renewed pressure after US President Donald Trump signed an executive order last week to double tariffs on imported steel products to 50%, a move intended to protect domestic producers amid rising concerns about unfair competition and overcapacity from foreign suppliers. While the decision triggered a spike in US domestic steel prices, it added downside pressure to international steel benchmarks, particularly in Asia, where Chinese exports now face even steeper barriers.
Within China, demand remains fragile. The construction sector, traditionally a major driver of rebar consumption, has struggled with tighter credit conditions, ongoing property sector woes, and lukewarm infrastructure investment despite repeated policy support. Steel inventories at major mills and warehouses remain elevated, and producers are increasingly scaling back output in an attempt to stabilize prices and avoid further inventory build-up.
Analysts suggest that unless there is a meaningful uptick in domestic stimulus measures or a resolution to key trade disputes, steel rebar prices could remain under pressure through the summer months. However, any signs of policy easing or improvement in downstream demand—particularly from housing, infrastructure, or manufacturing—could help rebar find a firmer footing in the second half of the year.
