Shanghai rebar steady after fall, worst week in 2 months

SINGAPORE, Apr 20: Shanghai steel futures steadied after hitting two-week lows on Friday, but still posted their worst week in two months, as slow Chinese demand kept the pressure on prices and restrained buyers’ appetite for raw material iron ore.
The most active October rebar contract on the Shanghai Futures Exchange hit a session low of 4,298 yuan ($680) a tonne, a level not seen since April 5, before closing little changed at 4,313 yuan.
For the week, construction-used rebar fell 1.6 percent, its steepest drop since mid-February.
‘Steel demand is not particularly poor, it’s just not stellar. Relative to what China’s done in previous years, there isn’t quite the same impetus and confidence in the wider economy to bolster sentiment in the steel market,’ said Rory MacDonald, iron ore broker at Freight Investor Services.
A slowing economy in China, the world’s biggest steel producer and consumer, is raising doubts about whether a seasonal uptick in demand in the second quarter, when construction recovers after winter, would be as strong as many had thought.
That could curb China’s steel production, which hit a record daily pace above 2 million tonnes in early April, and consequently demand for iron ore.
‘I don’t see anything radical ahead in the next two or three months. Unless the government makes a clear move on the macro side, I don’t see the Chinese steel market fundamentals altering all that much,’ said MacDonald.
Steel demand was similarly slack elsewhere, with South Korean steelmaker POSCO reporting a 54 percent fall in first-quarter operating profit to 422 billion Korean won ($371 million) on weaker demand and higher raw material cost.
Prices at spot sale tenders by iron ore miners this week either dropped o hardly moved compared to previous tenders, suggesting there is no urgency among buyers to stock up.
Top iron ore miner sold 117,500 tonnes of 62.5-percent grade sinter feed late on Thursday at 147.18 a tonne, cost and freight, down from $148 at a prior tender in March, a Shanghai-based trader said.
Rio Tinto sold 61-percent grade Pilbara iron ore fines at $149.10 per tonne, about the same price at which it sold a similar cargo last week at $149.18, the trader said.
That followed Wednesday’s tender by BHP Billiton which sold Newman and Yandi iron ore fines at levels near a previous tender.
‘A lot of the steel mills are looking at a correction in steel prices because of the high production and slow demand. So they are slowing down on purchasing seaborne iron ore cargo,’ said the Shanghai trader.
Prices of spot steel have dropped, with steel billet in China’s key Tangshan area in Hebei province falling to 3,780 yuan a tonne on Friday from 3,820 yuan last week, traders said.
Benchmark iron ore with 62 percent iron content <.IO62-CNI=SI> was unchanged at $148.50 a tonne on Thursday, according to Steel Index.
The index-based price hit a six-month peak of $149.40 last week, but has dropped since.
‘We seem to be in touching distance of the ceiling for iron ore prices,’ said MacDonald at Freight Investor Services, who is looking at $150 as a resistance level.
A similar iron ore price gauge by Platts hit $151.25 last week, but has also fallen since, standing at $150.50 on Thursday.
(AGENCIES)

LEAVE A REPLY

Please enter your comment!
Please enter your name here