FX.co ★ Steel Holds Decline on Shrinking Margins

Steel rebar futures in China remained under pressure at around CNY 3,100 per ton in early September, extending their recent decline as surging raw material costs deepened losses at steel mills and offset the support from stronger export demand. Industry data indicated that the average production costs for hot metal and steel billets at major mills in Tangshan rose sharply this week, widening average losses to more than CNY 100 per ton.

China’s non-manufacturing PMI—which tracks activity in the services and construction sectors—was unchanged at 49.0, in line with July’s reading and still at its lowest level since December 2022, underscoring persistent weakness in broader demand.

At the same time, China’s total steel exports climbed 7.8% week-on-week to 2.55 million tons in the week to August 31, marking a third straight weekly increase and the highest level in nearly eight weeks. Earlier in August, steel prices had rallied sharply as investors priced in a seasonal recovery in demand ahead of the traditional September peak construction period.