FX.co ★ Steel Pulls Back from 1-Month High

Steel rebar futures have slightly decreased to CNY 3,070 per tonne, retreating from the one-month high of CNY 3,100 reached on May 7th. This decline is attributed to a subdued demand outlook for ferrous metals, which outweighs indications of reduced steel supply. Recent reports suggest that Beijing may revise national laws to prohibit the sale of homes prior to their completion. Such a move would eliminate a crucial funding source for large property developers, further exacerbating financial challenges for the heavily indebted sector and potentially reducing steel demand from this significant global rebar consumer. Concurrently, Baosteel has indicated that Beijing is likely to impose a nationwide reduction in steel production to address issues of overcapacity and dwindling demand. Although the government has not disclosed the specific scale of this reduction, some reports suggest a potential supply decrease of 50 million tonnes this year. This follows data from the National Bureau of Statistics, which highlighted an unexpected contraction in Chinese manufacturing for April, as ongoing tariff exchanges between Beijing and Washington led to the lowest level of export orders in over two years.