Shanghai rebar prices sinking to lowest since late July
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.