Steel 7/12

While there is widespread skepticism that economic support from the Chinese government will lead to a recovery in steel demand, rebar futures fell below 3,300 Chinese yuan per ton and remained at a level close to the 7-year low of 3,275 yuan hit on 7/8.

The succession of weak data has strengthened the view that Beijing will announce specific measures to support decelerating economic growth during the next 3rd NPC.

The construction PMI for June fell to its lowest level this year.

Furthermore, the number of home sales decreased 17% year over year, and average house prices fell 4% per year in May.

Despite expectations of increased infrastructure investment, new measures aimed at reducing housing inventories within China in order to deal with a sharp drop in housing prices have worsened the outlook for construction activities, jeopardizing the survival of indebted Chinese real estate developers, which are the main source of global demand for steel.

Despite expectations of production cuts in the third quarter, bearish pressure prevailed.

According to the Global Macro Model and analysts' forecasts, steel is expected to be traded at 3309.13 yuan/MT by the end of this fiscal year. Also, it is expected that after 12 months it will be traded at 3189.54 yuan.