Steel rebar futures in China rebounded to CNY 3,060 per tonne from the three-month low of CNY 3,000 on October 15th as China’s effort to curb overcapacity for ferrous metals offset the outlook of poor demand. Chinese mills produced 73.5 million tons of steel in September, a 4.6% annual reduction to the lowest in nearly two years. This aligned with Beijing’s anti-involution campaign, aiming to revers years expansion in manufacturing capacity to curb deflationary pressures for industries with exposure to the slowdown in manufacturing and the ongoing property crisis, which specifically impacts rebar. This was consolidated by the government’s announcement of policy that shifts growth priorities to services and tech instead of goods producing industries, adding to the outlook of lower capacity for furnaces. In the meantime, BHP noted that it remained in talks with Chinese authorities over iron ore contracts, limiting concerns that steel mills would have to seek alternative feedstock.
