Mon Apr 15, 2013
* China Q1 GDP up 7.7 pct, less than forecast
* Iron ore swaps decline, may weigh on spot prices
By Manolo Serapio Jr
SINGAPORE, April 15 (Reuters) - Shanghai steel futures dropped more than 3 percent on Monday in a broad-based sell-off of risky assets after China's economy grew less than expected in
the first quarter, suggesting weak demand in the world's top commodity consumer.
The weakness in steel prices knocked down iron ore swaps as investors bet on softer spot rates with Chinese demand for the steelmaking raw material likely to take a hit.
The most-traded rebar contract for October delivery on the Shanghai Futures Exchange touched a session low of 3,711 yuan ($600) a tonne, not far off a four-month low of 3,705
yuan hit in early April.
It stood at 3,716 yuan by 0532 GMT, down 3 percent.
China's economy grew at an annual rate of 7.7 percent in the first quarter, below market expectations for an 8.0 percent expansion and frustrating investors hoping the world's No. 2
economy would rebound after posting its weakest growth in 13 years in 2012.
"The data suggests that China's economic recovery is extremely weak, much slower than expected, while steel output remains at record levels, which will put downward pressure on
steel prices," said Qiu Yuecheng, an analyst with steel trading platform Xiben New Line Co Ltd in Shanghai.
China has been producing crude steel in excess of 2 million tonnes a day since February as mills in the world's biggest steel consumer and producer banked on demand that usually peaks
during the second quarter.
The Chinese data came after soft U.S. retail sales and consumer sentiment numbers raised doubts about the economic recovery momentum in the world's top economy, driving down
commodities and equities on Friday.
"Near term, commodities could remain under pressure because the two giants in Asia have shown that they are not doing that well, euro zone indicators are looking at a deepening recession
and U.S. greenshoots are not sprouting up at a spectacular rate either," said Vishnu Varathan, market economist at Mizuho Corporate Bank, also referring to weakness in the Indian
economy.
Iron ore swaps fell in sympathy with Chinese steel futures. The May contract traded as low as $134 a tonne after settling at $138.50 on Friday, while the June contract slipped to a trough of $129 from $133.37, traders said.
Benchmark 62-percent grade iron ore .IO62-CNI=SI was flat at $141 a tonne on Friday, according to data provider Steel Index, as buying interest tapered off.
Lower inventories of iron ore prodded Chinese steel mills to restock last week, helping prices gain nearly 4 percent for the week, the biggest such gain since early January.
But the restocking pace has been modest with mills limiting raw material stocks given a cautious outlook for steel demand.
Shanghai rebar futures and iron ore indexes at 0532 GMT
Contract Last Change Pct Change
SHFE REBAR OCT3 3716 -114.00 -2.98
THE STEEL INDEX 62 PCT INDEX 141 +0.10 +0.07
METAL BULLETIN INDEX 141.44 +0.03 +0.02
Rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
($1 = 6.1922 Chinese yuan)
(Additional reporting by Ruby Lian in Shanghai; Editing by Tom Hogue)
* China Q1 GDP up 7.7 pct, less than forecast
* Iron ore swaps decline, may weigh on spot prices
By Manolo Serapio Jr
SINGAPORE, April 15 (Reuters) - Shanghai steel futures dropped more than 3 percent on Monday in a broad-based sell-off of risky assets after China's economy grew less than expected in
the first quarter, suggesting weak demand in the world's top commodity consumer.
The weakness in steel prices knocked down iron ore swaps as investors bet on softer spot rates with Chinese demand for the steelmaking raw material likely to take a hit.
The most-traded rebar contract for October delivery on the Shanghai Futures Exchange touched a session low of 3,711 yuan ($600) a tonne, not far off a four-month low of 3,705
yuan hit in early April.
It stood at 3,716 yuan by 0532 GMT, down 3 percent.
China's economy grew at an annual rate of 7.7 percent in the first quarter, below market expectations for an 8.0 percent expansion and frustrating investors hoping the world's No. 2
economy would rebound after posting its weakest growth in 13 years in 2012.
"The data suggests that China's economic recovery is extremely weak, much slower than expected, while steel output remains at record levels, which will put downward pressure on
steel prices," said Qiu Yuecheng, an analyst with steel trading platform Xiben New Line Co Ltd in Shanghai.
China has been producing crude steel in excess of 2 million tonnes a day since February as mills in the world's biggest steel consumer and producer banked on demand that usually peaks
during the second quarter.
The Chinese data came after soft U.S. retail sales and consumer sentiment numbers raised doubts about the economic recovery momentum in the world's top economy, driving down
commodities and equities on Friday.
"Near term, commodities could remain under pressure because the two giants in Asia have shown that they are not doing that well, euro zone indicators are looking at a deepening recession
and U.S. greenshoots are not sprouting up at a spectacular rate either," said Vishnu Varathan, market economist at Mizuho Corporate Bank, also referring to weakness in the Indian
economy.
Iron ore swaps fell in sympathy with Chinese steel futures. The May contract traded as low as $134 a tonne after settling at $138.50 on Friday, while the June contract slipped to a trough of $129 from $133.37, traders said.
Benchmark 62-percent grade iron ore .IO62-CNI=SI was flat at $141 a tonne on Friday, according to data provider Steel Index, as buying interest tapered off.
Lower inventories of iron ore prodded Chinese steel mills to restock last week, helping prices gain nearly 4 percent for the week, the biggest such gain since early January.
But the restocking pace has been modest with mills limiting raw material stocks given a cautious outlook for steel demand.
Shanghai rebar futures and iron ore indexes at 0532 GMT
Contract Last Change Pct Change
SHFE REBAR OCT3 3716 -114.00 -2.98
THE STEEL INDEX 62 PCT INDEX 141 +0.10 +0.07
METAL BULLETIN INDEX 141.44 +0.03 +0.02
Rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
($1 = 6.1922 Chinese yuan)
(Additional reporting by Ruby Lian in Shanghai; Editing by Tom Hogue)
No comments:
Post a Comment