Benchmark
Shanghai steel futures fell on Wednesday, with rebar extending losses to a
fourth session, as worries grew that the rainy season would slow construction
activity in China already hit by COVID-19 restrictions.
Data showing
signs of an economic recovery in China last month offered little comfort to the
ferrous commodity market in the world’s biggest steel producer.
The
most-traded October rebar contract on the Shanghai Futures Exchange SRBcv1
ended morning trade 1% lower at 4,613 yuan ($686.00) a tonne, after earlier
hitting 4,571 yuan, the lowest since May 27.
“Many areas
in China entered the rainy season, which affected (activity at) construction
sites,” analysts at Sinosteel Futures said in a note. “The already weak demand
may further decline.”
The
benchmark price of hot-rolled coil, which is steel used in car bodies and
appliances, dipped 0.8% on the Shanghai bourse SHHCcv1. Stainless steel SHSScv1
shed 1%.
The bearish
outlook for steel demand in China also dragged down steelmaking inputs, with
coke on the Dalian Commodity Exchange DCJcv1 falling 2.7%, while coking coal
DJMcv1 dropped 1.4%.
Despite the sluggish demand, China’s crude steel output rose 4.1% in May
compared with a month before, as disruptions from COVID-19 lockdowns around the
country gradually eased.
Hopes for
further stimulus support to China’s struggling economy helped iron ore rebound
from two-week lows, even as the central bank kept its medium-term policy rate
unchanged for a fifth straight month, as expected.
“The only
engine of economic growth currently is infrastructure investment. Banks may
lower the prime rate on June 20 as the possibility of lockdowns remains,” said
Iris Pang, ING chief economist for Greater China.
The
most-active September iron ore contract on the Dalian bourse DCIOcv1 rose 0.7%
to 901.50 yuan a tonne.
On the
Singapore Exchange SZZFN2, the front-month July contract climbed 0.3% to
$133.60 a tonne.
Source: Reuters (Reporting by Enrico Dela Cruz in Manila; Editing by Subhranshu
Sahu)