Steel hits two-month low

Steel rebar futures fell toward CNY 3,020 per tonne in mid-September, sliding to a two-month low as softening demand from top consumer China continued to weigh on sentiment.

The country’s property market remains under heavy strain, with liquidity issues among developers stalling new projects and dampening construction activity. Seasonal demand linked to the traditional building period has yet to materialize, leaving steel mills squeezed between weak end-user consumption and rising raw material costs.

Iron ore prices have climbed in recent weeks, supported by supply risks at Guinea’s Simandou mine and seasonal restocking activity in China, further eroding margins for steelmakers. Mills are facing difficult choices: scaling back production to preserve profitability or maintaining output to protect market share despite shrinking returns.

On the trade front, China’s steel product imports rose 11.1% in August to 0.50 million tonnes, reflecting stronger inflows of specialty products not widely available domestically. At the same time, exports slipped 3.4% to 9.51 million tonnes, reversing earlier gains and pointing to weaker overseas demand amid global trade frictions and protectionist policies.

Inventories of major steel products have been climbing steadily since mid-August, highlighting the imbalance between supply and demand. Stockpiles in both mills and social warehouses have risen despite reduced production in some hubs, underscoring how the prolonged property downturn and subdued infrastructure spending are keeping consumption soft. This persistent overhang is likely to continue dragging on prices and could discourage mills from ramping up production even if short-term margins improve.

Looking ahead, market participants are watching for signs of stronger infrastructure stimulus from Beijing that could help absorb excess supply and revive demand into the final quarter of the year. Without significant policy support, however, the steel market risks remaining under pressure, with further downside possible if property sector weakness deepens.