FX.co ★ Steel Extends Aggressive Pullback from 7-Month High

Steel futures in China fell to CNY 3,160 per tonne shortly after reaching a seven-month peak of CNY 3,345 on July 29th. This decline occurred as markets reassessed the extent of Chinese fiscal support amid a slowdown in consumption and the ongoing property crisis. Following the latest Politburo meeting, officials announced plans to implement expansionary fiscal policies and maintain accommodative monetary conditions to bolster spending. However, they stopped short of indicating any large-scale stimulus initiatives. Furthermore, tariffs imposed by the US on major economies led ArcelorMittal to revise its guidance downward and predict decreased steel consumption outside of China for the second half of the year. Nevertheless, expectations of reduced supply and strong infrastructure spending kept steel futures 5% higher in the third quarter. Chinese policymakers have pledged to address overcapacity in construction inputs, with Baosteel projecting a domestic output decline of over 50 million tonnes this year due to policy constraints.