China’s Shanghai rebar drops on fresh trade tensions

Posted on 31 October 2018
 

Source: Reuters

China’s construction steel rebar prices dipped on Tuesday amid a broad sell-off across commodities, as market sentiment was dampened by a fresh round of Sino-U.S. trade friction.

According to a Bloomberg report, the United States is preparing to announce tariffs on all remaining Chinese imports by early December if talks next month between Presidents Trump and Xi fail to ease the trade war.

Meanwhile, a poll of economists showed that growth in China’s factory sector likely cooled further in October as domestic demand faltered and exporters felt a bigger sting from the intensifying trade war with the United States.

Investors are also worried that a more lenient environmental policy in China will lead to a ramp-up of steel output this winter.

Eastern Shandong province said it plans to allow local authorities in seven cities to determine the length of their output restrictions on industry from mid-November to mid-March, but the cuts must cover at least two months and include December and January.

Also, 11 cities in three central provinces, known as Fenwei Plain, will introduce production restrictions during the winter season. However, no detailed plan to cut output has been released.

“Several regions have published their production restrictions plans during anti-pollution campaigns in winter, however the actual impact on steel output is expected to be limited,” said analysts from Huatai Futures in a note.

“Construction sites in northern China will close down amid falling temperatures, which would curb demand for steel products.”

The most-active steel rebar futures on the Shanghai Futures Exchange settled 0.5 percent down at 4,172 yuan ($599.12) a tonne when market closed at 0700 GMT.

Prices for steelmaking raw materials mostly fell on Tuesday, with Dalian iron ore down 0.3 percent to 539 yuan a tonne.

Coking coal contract dipped 0.2 percent to 1,394 yuan, while coke futures for January delivery edged up 0.1 percent to 2,402.5 yuan.

Source: Reuters (Reporting by Muyu Xu and Dominique Patton; Editing by Richard Pullin and Sherry Jacob-Phillips) 



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