FX.co ★ Steel Holds Pullback

Steel rebar futures in China remained steady around CNY 2,950 per tonne on Thursday. This stable position came after the futures had dropped to a nine-month low of CNY 2,920 three sessions earlier, amid persistent demand weakness in the ferrous metal sector and increasing protectionist measures against Chinese steel exports. The contraction in the construction sector, as measured by China's National Bureau of Statistics PMI, fell to a four-month low in May. This downward trend was primarily due to the U.S. imposing tariff threats, which curtailed consumption, coupled with an excess supply of housing stock, which diminished the need for new residential projects—a situation exacerbated by the typically slower construction activity in the summer months. In addition, the U.S. government doubled tariffs on steel imports, raising them to 50%, which has further impacted import demand while simultaneously increasing the availability of ferrous metals in major Asian markets. In response, Beijing indicated plans to reduce steel production capacity this year, with Baosteel projecting a production decrease of 50 million tonnes.