FX.co ★ Steel Retreats to 2-Month Low

Steel rebar futures dropped to CNY 3,170 per tonne in March, marking their lowest point in over two months. This decline was driven by tempered demand expectations and speculation among investors regarding potential supply cuts that may be mandated by the Chinese government. In the first two months of the year, housing investment in China decreased by nearly 10%, with new home prices also seeing a decline. These factors reinforce worries that the country's property crisis has not yet reached its lowest point. The ongoing downturn in property demand heightens fears that property developers might continue facing liquidation this year, which would significantly impact the primary source of rebar consumption in China, the largest global consumer. Further exacerbating the situation are escalating trade barriers from overseas, which pose challenges for steel mills in exporting to foreign markets. Countries such as Taiwan, Vietnam, South Korea, Brazil, and the United States have either threatened or implemented tariffs. The current oversupply of steel has already prompted the Chinese government to hint at cutting capacity this year, although specific details have not yet been announced.