Shanghai steel futures fell to their lowest in two weeks on Tuesday, reflecting worries about demand and excessive supply in China, while Dalian iron ore rose on the first trading day after the week-long National Day break.
The most-traded construction steel rebar contract on the Shanghai Futures Exchange, for January 2020 delivery, fell as much as 2.4 percent to 3,402 yuan ($477.43) a ton, the benchmark contract’s weakest level since Sept. 23. It was at 3,435 yuan.
Hot-rolled steel coil, used in cars and home appliances, fell as much as 2 percent to 3,410 yuan a ton, also the lowest since Sept. 23, and was at 3,443 yuan at the mid-day break.
Despite its trade war with the United States, China’s steel output is forecast to grow around 7 percent this year, Westpac Institutional Bank said in its October market outlook, after churning out a record 928.26 million tons in 2018.
Steel sales in China, however, have softened as growth in the machinery sector reversed and started to slow, while the offset from infrastructure has not been sufficient, Westpac analysts said.
“The Chinese administration clearly stated at the July Politburo economic meeting that property will not be used to boost growth this time so this significant part of steel demand is unlikely to come to the rescue in 2020,” they said.
Steel futures prices slumped despite plans by some Chinese steel mills to push prices higher in the coming days, according to a Shanghai-based trader.
“We have received several notices from mills saying they plan to adjust prices upwards in a move to test the market and gauge demand after the holidays,” the trader said. – Reuters