Chinese steel rebar futures held near a four-week low on Wednesday as traders worried that a growing trade row could crimp physical demand even as production continues to rise.
The most-active rebar futures on the Shanghai Futures Exchange edged up less than 0.1 percent to 3,690 yuan ($558.59) a tonne as of GMT 0237. It touched a low as 3,663 yuan a tonne in the previous session, its weakest since May 31.
Spot steel prices fell 0.6 percent to 4321.64 yuan a tonne on Tuesday, according to the Mysteel consultancy. Benchmark Tangshan square billet prices fell 40 yuan to 3,550 yuan a tonne.
“With falling physical steel prices, trade is getting lukewarm and market sentiment is turning to panic,” said analysts from CITIC futures in a note in Mandarin.
Stockpiles of steel products could continue to pile up this week given high output and leaner demand, they added. Stocks rose last week after falling for 14 weeks in a row. Inventories data is due for release late on Thursday.
Steel mills in China have been ramping up output to cash in on fat profit margins amid strong domestic demand.
Official data shows profits at China’s industrial firms rose sharply in May, up 21.1 percent to 607.1 billion yuan, despite signs of slowing momentum in the world’s No.2 economy and an intensifying trade spat with the United States.
Canada is also reported to be preparing new measures, likely to be a combination of quotas and tariffs, to prevent a potential flood of steel imports from producers seeking to avoid U.S. tariffs, which could put pressure on Chinese steel exports.
Dalian iron ore prices edged up 0.1 percent to 463 yuan a tonne, curbed by weak steel prices.
Other steelmaking raw materials were also quiet on Wednesday.
The coking coal contract for September delivery rose 0.8 percent to 1,187 yuan a tonne. Coke futures dipped 0.3 percent to 2,034.5 yuan a tonne.
Yaang Pipe Industry Co., Limited (www.yaang.com)