Steel rebar futures rose above CNY 3,150 per ton, approaching their highest levels since August last year, as China moved to rein in overcapacity against a backdrop of subdued demand. Rising raw material costs—driven by higher ocean freight rates and elevated energy prices linked to the war involving Iran—have further compressed steel mill margins and triggered production cuts. Recent data show that Chinese steel output declined 3.6% to around 160 million tons in the first two months of the year, reflecting both the usual seasonal slowdown around the Lunar New Year holiday and pollution controls imposed ahead of March’s annual legislative meetings. China’s steel industry remains in structural decline as the economy matures, dampening construction activity and compounding the impact of the protracted property downturn. The country’s annual steel output fell below 1 billion tons last year for the first time since 2019.