China steel prices extend slide on worries over slower demand

11 December 2018

Chinese steel futures fell for a third session in a row on Tuesday on concerns slower demand will persist next year, with prices of steelmaking raw materials iron ore, coking coal and coke also retreating.

Underlining weaker consumption, leading steelmaker Baoshan Iron & Steel Co Ltd said on Monday it would cut prices of its key products for January delivery.

The price of construction-used rebar on the Shanghai Futures Exchange was down 1.3 percent at 3,300 yuan ($480) a tonne by 0206 GMT.

Hot rolled coil, used in manufacturing, slid 1.4 percent to 3,266 yuan.

Citing weaker car sales and lackluster growth in infrastructure investment, Argonaut Securities analyst Helen Lau said she expects Chinese steel demand to slow down in 2019.

And if China’s steel exports remain weak, “that will increase risks of oversupply in the domestic market,” she said.

China’s steel shipments dropped nearly 9 percent to 63.78 million tonnes in January-November.

“This continuous decline in steel exports happened when the yuan currency has been on a depreciation track this year. This shows the currency depreciation could not help China’s steel exports,” said Lau.

The drop in steel prices came even as the top steelmaking city of Tangshan ordered steel mills and other industrial plants to make further output cuts this month as part of emergency measures to fight smog.

The most-traded iron ore on the Dalian Commodity Exchange eased 0.2 percent to 471 yuan a tonne and coking coal fell 0.9 percent to 1,430 yuan.

Coke tumbled 3.1 percent to 1,951 yuan per tonne, pulling back after recent gains including a more than 5 percent spike on Friday.

Spot iron ore for delivery to China was unchanged at $66.90 a tonne on Monday, according to SteelHome consultancy.