Steel Hits 6-Week Low

Steel rebar futures fell to around CNY 3,110 per tonne on Wednesday, touching a six-week low as slowing growth in China’s manufacturing and infrastructure investment weighed on demand for construction steel. Markets also reassessed the scope of output cuts and fiscal support from the government. Sentiment was dampened as Beijing said it would pursue expansionary fiscal and monetary policies to support spending but stopped short of announcing large-scale stimulus. Meanwhile, satellite data indicated that steel mills in China’s main production hubs continued to run with ample capacity midway through the third quarter, despite earlier signals from Beijing of a policy revamp to address overcapacity and the risk of deflation. At the same time, output in Tangshan was cut by 30% rather than being completely halted ahead of Beijing’s upcoming military parade, which traditionally requires clear skies.