Steel prices halt decline as production fears ebb

Steel rebar futures steadied above CNY 3,130 per tonne on Thursday, pausing this week’s slide as mandated production curbs ahead of China’s upcoming military parade turned out to be less severe than markets had anticipated, easing some fears over a sharp demand shock.

Authorities in Tangshan ordered steelmakers to cut sintering output by 30% from August 25 and blast furnace output by 40% from August 31, but the measures were far milder than earlier expectations of a full shutdown. In addition, the shorter-than-expected timeframe for restrictions suggests a more limited impact on consumption, reducing the risk of a prolonged downturn in steel demand.

Still, underlying sentiment remains fragile. The broader steel market has been weighed down by sluggish construction activity due to extreme heat and heavy rainfall, contributing to weak seasonal demand. High inventories across mills and traders have also pressured margins, keeping rebar prices under strain despite the production curbs. Market participants are closely monitoring whether Beijing will introduce more targeted stimulus for infrastructure and property sectors, which could provide firmer support for steel demand into September.

On the international front, trade tensions remain a major overhang. Earlier in the week, steel prices faced renewed pressure after the Trump administration broadened its 50% tariff on steel and aluminum imports to cover hundreds of additional products starting August 18.

President Donald Trump also signaled that further measures aimed at steel and semiconductor chips will be announced in the coming weeks, raising concerns about global supply chain disruptions. While the immediate impact of these tariffs may fall more heavily on exporters to the US, Chinese mills face risks of indirect fallout if global demand slows and international buyers pivot to alternative suppliers.

Looking ahead, traders expect short-term price stability as the market balances milder-than-feared domestic curbs with ongoing trade uncertainty. However, sustained recovery will likely depend on a meaningful rebound in downstream construction demand and clarity on both Chinese policy support and US tariff actions.