The People's Bank of China (PBOC) lowered its benchmark loan prime rates (LPR) on May 20, marking the first cut since October last year. The one-year LPR was reduced from 3.1% to 3.0%, and the five-year LPR dropped from 3.6% to 3.5%.
The central bank’s move is designed to lower borrowing costs for businesses and households, aiming to stimulate the economy and restore confidence, particularly in the troubled real estate sector.
Despite this easing, support for the steel market has not materialized. Analysts note that the effects of the rate cuts on real estate—and by extension, steel—may take time to emerge.
In the January–April period, China’s real estate investment fell 10.3% year-on-year, a sharper drop than the 9.9% decline recorded in Q1. New housing starts plunged 23.8% year-on-year, only marginally better than the 23.9% drop seen in the first quarter.
A Chinese steel trader commented, "A series of policy supports are on the way, but the market still follows a weak demand logic. Both export and domestic steel markets have seen only narrow fluctuations since the start of the year."
As of May 21, steel futures prices dipped slightly earlier in the week and remained relatively stable, reflecting limited short-term optimism despite the monetary easing.
VietnamSteel by Hoa Sen Group
