Steel Rebar Futures Plunge to Seven-Year Low on Weak Chinese Demand Outlook

Steel Rebar Futures Hit Seven-Year Low Amid Weak Chinese Economic Data

Team FS

08/Jul/2024

Key Points:

Steel rebar futures dropped to CNY 3,275 per tonne in July, the lowest in seven years, due to weak Chinese economic data.

The construction PMI in China fell to its lowest this year in June, and home sales dropped by 17% annually.

Despite hopes for increased infrastructure spending, the outlook for steel demand is dented by measures to reduce housing inventory and declining home prices.

Steel rebar futures plummeted to CNY 3,275 per tonne in July, marking their lowest level in seven years, as investors' expectations for a significant rebound in ferrous metal demand from China waned. A series of weak economic data points has heightened anticipation that the Chinese government will introduce substantial measures to support the slowing economic growth during its upcoming Third Plenum.

In June, China's construction PMI fell to its lowest level this year, indicating a significant slowdown in construction activity. Furthermore, home sales dropped by 17% from the previous year, and average home prices sank by 4% annually in May. These developments have raised concerns about the health of the construction sector, a major driver of steel demand.

Despite hopes for increased infrastructure spending, new measures aimed at reducing the elevated housing inventory in China to address the sharp decline in housing prices have negatively impacted the outlook for construction activity. This situation jeopardizes the survival of debt-ridden Chinese property developers, who are crucial to global steel demand.

The bearish sentiment in the steel market has persisted despite expectations that steel mills would cut back on output in the third quarter to manage supply levels. Investors remain cautious as they await concrete policy measures from the Chinese government that could potentially revive demand and stabilize the market.

Overall, the steel rebar market faces significant challenges as it contends with weak demand prospects and economic uncertainties in China, the world's largest steel consumer.

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Steel Rebar Futures Hit Seven-Year Low Amid Weak Chinese Economic Data

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