SINGAPORE, Nov 14: Shanghai steel futures dropped to their lowest level in more than two weeks on Thursday, tracking losses in spot prices amid subdued demand in top consumer China.
Baoshan Iron and Steel, China’s biggest steelmaker by market value, said it would keep its prices unchanged for December but offer discounts for early bookings for some products.
‘That shows Baosteel is still not confident about the market, and we’re hearing there aren’t a lot of volumes sold in the steel market because demand was slow,’ said a Shanghai-based trader.
The most active rebar contract for May delivery on the Shanghai Futures Exchange was down nearly 1 percent at 3,629 yuan ($596) a tonne by the midday break. It fell as low as 3,620 yuan at one stage, its weakest since Oct. 30.
Activity in the construction sector, a major consumer of steel in China, typically slows during winter and the temperature has been dropping in northern China, traders said.
The price of rebar, used in construction, has dropped more than 5 percent in the past two months.
Thursday’s price drop followed declines in spot prices of other steel products in China, with steel billet falling 30 yuan to 3,000 yuan a tonne on Wednesday, traders said.
Iron ore futures were also softer, with the most active May contract on the Dalian Commodity Exchange down half a percent at 941 yuan per tonne.
Trades in the spot iron ore market remained limited, although some deals were concluded at higher prices.
Global miner BHP Billiton sold a cargo of 62.7 percent grade Australian iron ore fines at $138.20 a tonne at a tender on Wednesday, about $2 higher than a previous sale of the same grade, traders said.
‘I don’t think that price is repeatable in the current situation, it’s quite high,’ said another trader in Shanghai.
Brazil’s Vale sold a 64.02 percent grade cargo at $143.81 per tonne and Rio Tinto is offering a cargo of 61 percent grade Australian Pilbara fines at a tender closing later on Thursday, traders said.
The Pilbara cargo may be sold higher than the last deal for the grade of around $135 ‘because this particular grade is easier to sell even in a difficult market’, said the second trader.
Chinese buying interest for iron ore has slowed this week after mills snapped up cargoes last week that lifted prices to a two-month high of $137.10 a tonne on Nov. 6.
Iron ore for immediate delivery in China’s Tianjin port was up 20 cents at $136.10 on Wednesday, according to data provider Steel Index. Shanghai rebar futures and iron ore indexes at 0405 GMT
(AGENCIES)
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