FX.co ★ Steel Rises to November High

Steel rebar futures in China have climbed to CNY 3,090 per tonne, marking the highest point reached in November thus far, as reduced supply conditions take precedence for buyers. In October, China's crude steel output declined by 12% year-on-year, marking it as the lowest for that month since 2021. This aligns with China's commitment to restrain overcapacity in industries, aiming to curb the detrimental competition among smelters and avert a deflationary spiral. Consequently, steel exports saw a 12.5% reduction compared to the previous year, falling to 978.2 million tonnes in October. This represents the first decrease this year, highlighting the effect of protectionist measures from major trading partners. These measures have compelled domestic mills to lessen their reliance on international clients. Despite these dynamics, low demand is projected to lead to a 7% decline in steel futures this year. Development in China's property and infrastructure sectors, which heavily utilize rebar, continues to be subdued due to overarching economic challenges and the ongoing property crisis, as indicated by October's record low construction Purchasing Managers' Index (PMI).