Mon Aug 20, 2012
* Shanghai rebar marks record low at 3,599 yuan/T
* Iron ore on Friday fell to lowest since late-2009
* Rebounding steel output could cap any possible gains in prices
By Ruby Lian and Fayen Wong
SHANGHAI, Aug 20 (Reuters) - Chinese steel futures hit another record low on Monday, falling below 3,600 yuan ($570) on festering worries over demand in the world's second-largest economy, with iron ore remaining trapped at a 2-1/2 year trough.
The most-traded rebar for January delivery on the Shanghai Futures Exchange dropped as low as 3,599 yuan per tonne, down 0.7 percent from the previous close. Futures on rebar, or reinforcing steel bar, used in construction, have declined 20 percent from the year's peak.
An unexpected rebound in steel output in top steel-producer China may curb any future gains as it could exacerbate a recent supply glut and high inventories, analysts said.
"Market fundamentals remain poor and rising output in early August further dampened sentiment," said Ding Rui, an analyst at Shanghai Zhongcai Futures.
"I expect a weak rise in steel prices as they have largely fallen below production cost, while I don't see any big improvement in steel demand ahead."
Some traders said they were making a loss of around 300 yuan per tonne based on current prices.
China's daily crude steel output rose 1.1 percent to 1.970 million tonnes over Aug. 1-10 from July 21-31, belying expectations for a modest fall, as many steel mills resumed running after a round of brief maintenance in mid-July.
Iron ore with 62 percent iron content .IO62-CNI=SI, one of the industry benchmarks, fell 1.5 percent to $110.2 a tonne last Friday, its lowest since December 24, 2009.
Major Chinese steel mills have cut steel product prices for September bookings, illustrating how bearish they are on a market which traditionally sees demand recover in the autumn as construction projects speed up.
Major Chinese steelmaker Angang cut its main steel product prices by 100-320 yuan for September bookings, traders said, after Baosteel reduced it September
prices, the third cut since June this year.
Shanghai rebar futures and iron ore indexes at 0159 GMT
Contract Last Change Pct Change
SHANGHAI REBAR* 3619 -7.00 -0.19
PLATTS 62 PCT INDEX 111.75 -2.00 -1.76
THE STEEL INDEX 62 PCT INDEX 110.2 -1.70 -1.52
METAL BULLETIN INDEX 111.66 -1.28 -1.13
*In yuan/tonne
#Index in dollars/tonne, show close for the previous trading day
($1 = 6.3585 Chinese yuan)
(Editing by Joseph Radford)
* Shanghai rebar marks record low at 3,599 yuan/T
* Iron ore on Friday fell to lowest since late-2009
* Rebounding steel output could cap any possible gains in prices
By Ruby Lian and Fayen Wong
SHANGHAI, Aug 20 (Reuters) - Chinese steel futures hit another record low on Monday, falling below 3,600 yuan ($570) on festering worries over demand in the world's second-largest economy, with iron ore remaining trapped at a 2-1/2 year trough.
The most-traded rebar for January delivery on the Shanghai Futures Exchange dropped as low as 3,599 yuan per tonne, down 0.7 percent from the previous close. Futures on rebar, or reinforcing steel bar, used in construction, have declined 20 percent from the year's peak.
An unexpected rebound in steel output in top steel-producer China may curb any future gains as it could exacerbate a recent supply glut and high inventories, analysts said.
"Market fundamentals remain poor and rising output in early August further dampened sentiment," said Ding Rui, an analyst at Shanghai Zhongcai Futures.
"I expect a weak rise in steel prices as they have largely fallen below production cost, while I don't see any big improvement in steel demand ahead."
Some traders said they were making a loss of around 300 yuan per tonne based on current prices.
China's daily crude steel output rose 1.1 percent to 1.970 million tonnes over Aug. 1-10 from July 21-31, belying expectations for a modest fall, as many steel mills resumed running after a round of brief maintenance in mid-July.
Iron ore with 62 percent iron content .IO62-CNI=SI, one of the industry benchmarks, fell 1.5 percent to $110.2 a tonne last Friday, its lowest since December 24, 2009.
Major Chinese steel mills have cut steel product prices for September bookings, illustrating how bearish they are on a market which traditionally sees demand recover in the autumn as construction projects speed up.
Major Chinese steelmaker Angang cut its main steel product prices by 100-320 yuan for September bookings, traders said, after Baosteel reduced it September
prices, the third cut since June this year.
Shanghai rebar futures and iron ore indexes at 0159 GMT
Contract Last Change Pct Change
SHANGHAI REBAR* 3619 -7.00 -0.19
PLATTS 62 PCT INDEX 111.75 -2.00 -1.76
THE STEEL INDEX 62 PCT INDEX 110.2 -1.70 -1.52
METAL BULLETIN INDEX 111.66 -1.28 -1.13
*In yuan/tonne
#Index in dollars/tonne, show close for the previous trading day
($1 = 6.3585 Chinese yuan)
(Editing by Joseph Radford)
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