China steel futures suffer 5th week of losses amid supply glut
3 December 2018
The Chinese steel market ended lower on Friday, falling for the fifth successive week with pressure from ample supplies and dismal demand.
Raw material iron ore rose for the third straight session but the market suffered its worst weekly drop in eight months.
The most-traded January rebar on the Shanghai Futures Exchange shed 0.8 percent to 3,587 yuan ($516.64) a tonne. The market has given up 2.8 percent this week and has fallen over 13 percent in November.
“There is no order for the steel mills to cut production, it is flexible which means some might continue to produce,” said analyst Helen Lau of Argonaut Securities.
“Overall, steel margins have declined from peak levels but profits are still high enough for mills to continue producing.”
China has allowed regions to determine production restrictions instead of imposing across-the-board curbs like it did last winter for its anti-smog campaign, keeping steel output high in the world’s top producer while consumption weakens in a cooling economy.
Chinese steel producers ran up losses for the first time in three years this month as prices slid into a bear market on weak demand and near-record supply, ending years of solid profit margins.
Iron ore on the Dalian Commodity Exchange gained 1.7 percent to 482 yuan a tonne. The market has lost 5.6 percent this week, marking its biggest weekly fall since late March. For the month, iron ore has slid more than 10 percent.
Coke gained 0.7 percent to 2,135 yuan a tonne and coking coal gave up 0.3 percent to 1,329.50 yuan a tonne.