The price of a key Chinese steel product used in construction is on the cusp of hitting its lowest level in more than seven years, underscoring the protracted downturn that’s spooking the industry in the rest of the world.

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. Spot prices have come under heavy pressure as the nation’s years-long real estate crisis rolls on.

While rebar is not the main steel export, broad weakness in China’s steel market has worldwide implications as traders ship more overseas instead. ArcelorMittal SA, the biggest producer outside the Asian powerhouse, on Thursday warned Beijing had put the global sector in an unsustainable position with its "aggressive" exports.

Spot rebar was at 3,621 yuan (US$501 or RM2,268) a ton on Thursday, down about 13% this year, according to researcher Antaike. It needs to fall just six yuan to reach the weakest point since April 2017. 

The price of hot-rolled coil is also falling, with Antaike data showing export prices close to the cheapest since 2020. Overseas shipments of the product have fuelled China’s export boom. 

While demand weakness has been the main culprit for rebar’s decline, the introduction of new quality standards has also jolted the market. The regulations are due to come into force on Sept 25, spurring traders to offload material in advance.

On the futures market, iron ore was little changed in Singapore at US$102.65 a ton as of 11.36am local time on Friday. They were on track for a narrow weekly gain.

  - Bloomberg