China’s steel, raw ingredients dip on global sell-off, demand woes

China’s steel and its raw material prices fell on Tuesday following a broader sell-off across risk equity assets, as investors remained cautious ahead of the U.S. Federal Reserve meeting.

The Fed is widely expected to raise interest rates for a fourth time at the end of its two-day meeting on Wednesday, while investors also are concerned whether the central bank will cut its guidance on policy tightening in 2019.

Benchmark Shanghai rebar futures slid 0.1 percent to 3,434 yuan ($498.45) a tonne as of 0202 GMT.

A weak demand outlook also weighed on the Chinese ferrous market.

Chinese government advisers on Monday recommended that the country should lower next year’s growth target to 6.0-6.5 percent as headwinds, including a trade dispute with the United States, increases risks for the economy.

That is in line with expectation from China’s government consultancy who predicts steel consumption in the country to fall next year, dragged down by waning demand in the property, automobile and energy sectors.

Fitch Solutions Macro Research also said in a note it expected global steel consumption to slow the growth rates to 2.2 percent in 2019, compared with 4.2 percent in 2018 and 5.1 percent in 2017, respectively, as slowdown in China’s construction-centric demand will offset a modest acceleration in developed economy demand.

Prices of raw materials used in steelmaking also edged down alongside steel products on Tuesday.

The most-active iron ore futures for May delivery on the Dalian Commodity Exchange eased after soaring to nearly a four-week-peak in the previous session. It stayed little changed at 488 yuan a tonne.

Dalian coking coal futures fell 0.8 percent to 1,237 yuan and coke contract went down 0.8 percent at 2,012.5 yuan.

“Investors are also closely watching if China will give any stimulus amid the 40th anniversary of the reform and opening-up policies,” Huatai Futures said in a note.

China’s President Xi Jinping will give a speech at the ceremony of the anniversary on Tuesday.

Source: Reuters

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