China steel futures steadied on Thursday, but posted their steepest monthly fall in eight months in May after spot iron ore prices recorded the worst month since October 2011.
The most-traded rebar contract for October delivery on the Shanghai Futures Exchange closed nearly flat at 4,103 yuan ($650)/MT. On a continuous basis, the contract fell more than 4% in May, the most since September.
But this week's gains in steel prices, both spot and futures, have raised hopes that iron ore prices may rise further as Chinese mills rebuild stockpiles after staying out of the market in recent weeks.
“While the Chinese steel market has seen prices rallying over the past few days on Beijing's promises of stimulus, we do not see a fundamental turn in pricing in China as production is likely to continue to outpace demand,” Steel Market Intelligence said in a note.
“We believe that Chinese steelmakers are unlikely to make meaningful production cuts with weaker raw material prices, reluctance to layoff trained workers, and 'hope' that Beijing will create demand.”
Leave a Reply