FX.co ★ Steel Rises to 2-Week High

Steel rebar futures traded at CNY 3,190 per tonne in June, the highest level in two weeks, extending gains to more than 3% since the start of the year as aggressive stimulus by the Chinese government bolstered demand expectations. Major ratings agencies signaled they expect Chinese home prices to stop falling by next year, suggesting a bottoming out in one of the world’s key sources of rebar demand. These expectations are in line with measures by local authorities to stimulate property purchases, including looser home-buying restrictions in Shenzhen and higher subsidies in Guangzhou.

Infrastructure spending is also set to underpin demand for ferrous metals, supported by Beijing’s initiatives to develop industrial and commercial hubs in Western China. On the supply side, domestic steel production fell 2.8% year-on-year to 83.6 million tons, the lowest level for that month since 2018.