China steel rebar prices are down over 20% year to date at 3,208 Chinese yuan per ton, data from financial information provider Wind showed.
China's steel industry has been struggling as the country's property sector remains in the doldrums and is unable to absorb excess capacity, industry watchers told CNBC."Chinese demand has been a major disappointment for metals across the board," said Sarbin Chowdhury, head of commodities analysis at BMI, particularly steel and iron ore.
The Chinese steel industry is caught"between a rock and a hard place" as steel makers' margins are getting increasingly squeezed by weak demand, said Bank of America's Head of Asia Pacific Basic Materials, Oil and Gas Research, Matty Zhao. The muted demand is expected to continue into 2025 on the back of a"very weak" Chinese property market, she told CNBC.
"Steel mill margins in China are at risk of falling to the most negative levels this year, applying potentially even more downward pressure on iron ore prices," said Commonwealth Bank of Australia's Vivek Dhar. July saw 57.1 million tons of net steel exports out of China, and if that rate sustains for the rest of the year, 2024 would see a 17% year-on-year increase of Chinese net steel exports, said Citi's team, adding that 2023's increase in steel exports reduced the steel production head room for the rest of the world.that China's excess production has rendered the steel market conditions"unsustainable.