Posted on 31 Aug 2022
Chinese futures prices of major ferrous commodities including steel, iron ore, coke and coking coal continued trending downwards on August 30, with those of key steelmaking raw materials posting steeper declines. Market sources chiefly cited the lack of confidence in the near-term steel-market fundamentals.
On Tuesday, the most-traded contracts of iron ore, coke and coking coal on the Dalian Commodity Exchange (DCE) – all for January delivery – tumbled when the daytime trading session ended, the exchange data showed. Significantly, the iron ore contract lost Yuan 36/dmt ($5.2/dmt) or 5% to close at Yuan 682/dmt.
Meanwhile, the DCE's coke and coking coal January contracts slumped by 5.6% and 6.4% to close at Yuan 2,463/tonne and Yuan 1,868/t respectively.
"The substantial falls in price (of these steelmaking raw materials) were largely due to the news that further steel production cuts will be observed in Tangshan this year, largely reducing the consumption of crucial steelmaking inputs," commented Steven Yu, a senior ferrous analyst at Mysteel.
During a meeting attended by local government and steel mill representatives last Friday, officials from Tangshan, the country's top steel-producing city in North China's Hebei province, aimed to cut crude steel output by 8.26 million tonnes this year from that for 2021, as Mysteel Global reported.
On the other hand, the prospect of weakening demand for steelmaking raw materials has also weighed on the prices of finished steel products this week.
For example, the most-popular rebar and hot-rolled coil contracts on the Shanghai Futures Exchange (SHFE), both for January delivery, fell Yuan 155/t and Yuan 147/t to close at Yuan 3,661/t and Yuan 3,732/t on Monday.
"Market expectations for a steel demand recovery were somehow dampened as the traditionally robust season for steel consumption over September-October is just around the corner, while actual demand for steel has yet to show any marked signs of firming," another Shanghai-based analyst told Mysteel Global.
Nevertheless, Chinese steel demand may still pick up moderately in coming months, with Beijing's various preferential policies to stabilize and boost the national economy taking effect and more stimulus packages on the way, he noted.
Source:Mysteel Global
