China steel prices sag further on slow demand, coke down 4 pct

Posted on 15 December 2017

Source: Reuters

China’s steel futures fell nearly 2 percent on Thursday as demand in the world’s top consumer slows over winter along with construction activity, although multi-year low stockpiles capped losses.

Prices fell even as fresh data showed China’s steel output declined to a nine-month low in November because of state-ordered production curbs aimed at limiting pollution. Steelmaking raw materials coking coal and coke slid about 4 percent.

Given freezing weather, “construction activities may gradually slow further in the northern part of China, so there’s less demand for construction steel,” said Richard Lu, analyst at CRU consultancy in Beijing.

Some property developers may also be slowing purchases as they pay back loans with the year-end approaching, he said.

The most-active rebar contract for May delivery on the Shanghai Futures Exchange closed down 1.6 percent at 3,786 yuan ($573) a tonne, adding to Wednesday’s 2.4-percent slide.

The construction steel product, up almost 10 percent in November, hit a three-month high last week as China’s output curbs thinned stockpiles to the lowest in years.

Inventory of rebar at Chinese traders stood at 2.85 million tonnes on Dec. 8, the lowest since at least December, 2011, according to SteelHome consultancy. China’s average daily crude steel output fell to 2.205 million tonnes in November from 2.334 million tonnes in October, based on government data released on Thursday. It was the lowest level since February. But some end-users are reluctant to buy more steel, said CRU’s Lu. “Buyers were hesitant to place orders because they said prices are currently too high for them,” he said.

Coking coal on the Dalian Commodity Exchange fell 3.8 percent to 1,236.50 yuan a tonne and coke , which is processed from coking coal, dropped 4.2 percent to 1,998 yuan.

After recent sharp gains, coke prices “need to slow down a little”, said Cao Ying, analyst at SDIC Essence Futures.

“But prices of both coke and steel will stay high during the winter,” she said, with both commodities covered by Beijing’s production curbs. China’s coke output fell 10.9 percent in November to 34.47 million tonnes. Iron ore slipped 0.6 percent to 498 yuan a tonne, while

Iron ore for delivery to China’s Qingdao port slid 1 percent to $70.54 a tonne on Wednesday, according to Metal Bulletin, below a three-month high of $72.68 reached on Dec. 4.

“We think China’s iron ore market remains saturated with both domestic and import sources. Therefore, iron ore prices should continue to be under pressure,” Argonaut Securities analyst Helen Lau said in a note. 

«  Back

Copyright © 2016 SEASI Site. All Rights Reserved.