Shanghai re­bar prices sink­ing to low­est since late July

Global Times US Edition - - BIZMARKETS -

Shanghai re­bar steel prices tum­bled nearly 4 per­cent to the low­est since late July on Mon­day, pres­sured by wor­ries over slow­ing de­mand in top con­sumer China over the sea­son­ally weak win­ter pe­riod.

Prices of steel­mak­ing raw ma­te­ri­als also sagged along­side steel, with coke also slid­ing al­most 4 per­cent to a five-week trough.

The most ac­tively traded Jan­uary re­bar on the Shanghai Fu­tures Ex­change dropped as much as 3.8 per­cent to 3,818 yuan ($549) a ton, its weak­est since July 25. The con­struc­tion steel prod­uct was down 3.1 per­cent at 3,845 yuan.

In a sign of weak­en­ing de­mand, ma­jor Chi­nese steel­maker Baoshan Iron and Steel said on Sun­day it would cut do­mes­tic prices for key steel prod­ucts by as much as 200 yuan per ton for De­cem­ber.

“This shows that as the win­ter sea­son has kick­started, steel de­mand is slow­ing due to weak sea­son­al­ity,” Arg­onaut Se­cu­ri­ties an­a­lyst He­len Lau said in a note.

With China’s steel pro­duc­tion not show­ing any signs of slow­ing down, Lau said prof­itabil­ity growth at Chi­nese steel pro­duc­ers may have “peaked and [we] ex­pect mar­gin ero­sion go­ing for­ward.”

Ahead of China’s win­ter curbs where cities are or­dered to re­duce steel out­put to limit smog, the coun­try’s crude steel out­put av­er­aged 2.7 mil­lion tons in Septem­ber, a record high.

The de­cline in steel prices came even as top steel-pro­duc­ing North China’s He­bei Province asked 10 ma­jor cities to is­sue an orange smog alert, re­quir­ing steel mills to halve their out­put. The cities were set to en­force emer­gency smog re­duc­tion mea­sures from Sun­day un­til Novem­ber 16.

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