Shanghai rebar steel futures dropped to near record lows on weak demand that has spurred Chinese producers to cut production with the benchmark price of raw material iron ore set for its biggest weekly fall in two months.
The most traded rebar contract for delivery in January on the Shanghai Futures Exchange touched a low of CNY 3,014 a tonne, before paring losses to CNY3,030.
Construction used rebar fell to CNY 3,010 on June 17th, the lowest for a most active contract since the bourse launched rebar futures in 2009. For the week, rebar was down nearly 2%
According to industry consultancy Mysteel, steel stocks in the world’s biggest consumer fell to 12.78 million tonnes last week the lowest since December 2012 as traders continued to run down inventory in response to seasonally slow demand.
Ms Helen Lau analyst at UOB-Kay Hian Securities in Hong Kong said that “Traders are still destocking and I expect this will continue until the end of August. It’s the weak season and construction is really slow.”
Ms Lau said that weak financing conditions are also discouraging any restocking.
Source – Reuters