FX.co ★ Steel Rises to Over 3-Month High

Steel futures in China reached CNY 3,170 per tonne in July, marking their highest point in over three months. This rise resulted from a combination of anticipated reduced production levels and increased public spending in the construction sector, providing a counterbalance to concerns about an oversupplied steel market. In response, Chinese policymakers have committed to reforming industrial policies to eliminate excess capacity, a strategy that should bolster profit margins for steel furnaces and mills. This policy shift occurs against the backdrop of China's persistent property crisis and the rising tide of protectionist trade policies from significant steel-importing nations, both of which have dampened demand. Earlier, Baosteel, a leading steel producer, forecasted a reduction in national output by 50 million tonnes this year. Concurrently, steel prices found support following the announcement of a CNY 1.2 trillion hydropower plant project. This development not only bolsters the demand for ferrous metals but also indicates that the Chinese government intends to leverage infrastructure projects as a means to invigorate its slowing economy and mitigate the effects of the property crisis.