Steel Rises to Over 3-Month High

Steel futures in China rose to CNY 3,170 per tonne in July, the highest in over three months, as the outlook of lower output and public expenditure in construction pared the view of an oversupplied steel market. 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. In addition to supporting bids for ferrous metals, the project and signaled that the Chinese government will continue to using infrastructure projects as a way to stimulate its slowing economy and counter the impacts of its property crisis.