China’s steel futures fell by more than 2 percent to a
record low on Wednesday, dogged by weakening demand in the world's top consumer.
The most-traded rebar contract for January delivery on the
Shanghai Futures Exchange hit a session trough of 3,366 yuan ($530) a tonne,
its lowest since the bourse launched rebar futures in 2009. It was down 2.1
percent at 3,381 yuan by the midday break.
That marks the 13th straight day of declines for rebar which,
with its loss of more than 10 percent so far in August, is on course for its
worst month in nearly a year.
Demand for rebar, or reinforcing bar, mostly used in construction,
is taking a hit as China's economy slows down this year to what may be its
weakest pace in a decade.
“We believe that China is in the middle of a
considerable inventory adjustment. While there has been some suggestion that steel
mills are destocking we believe this could take time,” Deutsche Bank said
in a note.
Between March 2 and Aug. 24, the price of rebar in south China
has fallen 14 percent to $607 a tonne, while the supply of steel stocks has
dropped to 5.83 days from 7.02 days, Commonwealth Bank of Australia said.
The sustained drop in Chinese steel prices further has also curbed
even appetite for iron ore, with the price of benchmark 62-percent grade
.IO62-CNI=SI at $94.80 a tonne on Tuesday, the lowest since November 2009,
according to data provider Steel Index.
Source: Reuters
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