Rebar futures gain optimism on Beijing's economic support

Rebar futures have climbed back towards the CNY 3,900 per tonne level after hitting a two-week low of CNY 3,850 on January 18th.

Market sentiment is influenced by ongoing assessments of how economic support measures from Beijing might impact demand for ferrous metals. There's growing optimism that Beijing's anticipated significant stimulus package could alleviate concerns about weakening demand, particularly in steel-intensive sectors like construction and manufacturing. Despite this positive outlook, macroeconomic challenges, including a sharp decline in property purchases, have led major Chinese steel producers to scale back production significantly. December saw a notable 15% year-on-year and 11% month-on-month drop in China's steel output, reaching a six-year low of 67.44 million tonnes. However, the rebound in steel futures is tempered by a lack of active bidding, contributing to a significant increase in rebar stocks held at major Chinese warehouses, which have surged more than five-fold to 112 thousand tonnes.