China steel futures drop on demand
Chinese steel futures swung to losses on Tuesday on concerns that steel demand in the world’s top producer and consumer will seasonally slow down as the year-end nears.
The most active rebar on the Shanghai Futures Exchange fell 0.84 percent to 3,884 yuan ($586.68) a tonne by close.
China’s government has vowed to clear its air, ordering 28 cities to curb industrial production, prompting a shortage of supplies in some steel products including rebar for construction use. But steel demand is expected to decline seasonally in late December as cold weather hits construction, offsetting upward momentum in prices driven by the supply shortages.
“Some investors are bullish on low inventories and mills’ output cut, while some are cautious, betting demand will wane as cold winter gradually comes,” said an analyst with a trading firm in Hangzhou.
China’s top steelmaking province of Hebei issued its second-highest air pollution alert on Tuesday, with 10 industrial cities carrying out emergency anti-pollution measures including further cuts at steel mills and coke plants.
“Rebar is positive as the output curb has led to falling inventories at both steel mills and commercial warehouses. The market is tightly balanced,” said Wang Yilin, an analyst with Sinosteel Futures in Beijing.
Iron ore on the Dalian Commodity Exchange dropped 1 percent to 503 yuan a tonne.