Prices of a key Chinese steel product used in construction were at their lowest since 2017 as the world’s biggest market for the metal grappled with a massive glut.
Reinforcement bar — or rebar for short — is a benchmark for China’s traditional steel markets because it’s used to strengthen concrete in buildings and infrastructure. The eight-year low in Shanghai highlights the demand struggle facing steelmakers due to a prolonged downturn in the country’s property sector.
The China Iron and Steel Association reiterated at a conference this week that controlling capacity expansion is a focus and had earlier said that Beijing is “actively deploying and promoting” a crude steel production mandate. Rebar prices have dropped 11% so far this year, while iron ore is down about 6%.
The bigger drop in prices of domestic steel compared with raw materials suggested that “consolidation and rationalization in China are needed to boost prices”, analysts at Bloomberg Intelligence wrote in a note. For iron ore, prices might ease toward $90 a ton by October on seasonal softness and rising supply, “though cost support and policy easing could limit downside.”
