Steel Eases from 4-Month High

Steel futures in China eased to CNY 3,200 per tonne from the four-month high of CNY 3,300 touched on July 25th as ample supply of iron ore reduced costs for furnaces, momentarily offsetting the impact of steel production cubs. New data showed that exports from Australia’s largest bulk terminal rose to a record, while ore deliveries and output from Fortescue and Vale both rose more than expected. Still, futures remained 8% since the start of the month. Chinese policymakers vowed to reform industrial policy to further the pledge to erase overcapacity. Such policy would aid margins for furnaces and mills as the ongoing property crisis in China and the growing momentum of protectionist trade policies from key steel importers eroded demand. Previously, major producer Baosteel stated it expects national output to fall by 50 million tonnes this year. In the meantime, prices were supported by the announcement of a CNY 1.2 trillion hydropower plant project.