SHANGHAI, Dec 17: Shanghai rebar futures fell for a third straight session on Tuesday as investors shorted positions in expectation of limited impact from a temporary closure of some Chinese steel mills and a slowing economic recovery.
The shutdown of some facilities in the top steel producing province of Hebei would last only about half a month, with impact on this month’s output being seen as limited, industry sources said.
The slowing economy, despite being on an improving track, has also weighed on the market outlook, while low inventories of steel have spurred hopes that a modest pace of restocking might kick off ahead of the lunar new year at the end of January, supporting prices.
‘Some investors cleared their long positions, but I expect a modest pick-up in prices, probably 2 percent to 3 percent, before the spring festival, as low inventories suggest restocking, though this would be limited by the slowing economy outlook,’ said Ding Rui, an analyst with Zhongcai Futures in Shanghai.
The most active rebar futures contract for May stood little changed at 3,676 yuan ($610) a tonne by midday break, after falling to a session low of 3,667 yuan.
Open interest, the total number of contracts held by investors, fell to 1.482 million lots on Tuesday, from 1.529 million on Monday. Each lot is 10 tonnes of rebar.
The flash Markit/HSBC Purchasing Managers’ Index for China fell to a three-month low of 50.5 in December as reduced output offset a pickup in new orders, in line with other recent data pointing to a resilient but slowing economy.
Inventories at large steel mills fell 7 percent to 12.95 million tonnes by the end of November from the middle of the month, the China Iron & Steel Association data showed.
The losses in rebar weighed on raw material iron ore, dragging it down to a one-and-a-half-month low.
Benchmark 62 percent grade iron ore for immediate delivery to China fell again by 0.8 percent to $134.9 a tonne on Monday, its lowest since Oct. 31, according to data compiler Steel Index.
At the Dalian Commodity Exchange, iron ore for May delivery traded almost unchanged at 917 yuan a tonne by midday.
(AGENCIES)
Follow our WhatsApp channel