China steel price slumps to 12-year low

Author: Paul Ploumis
18 May 2015 Last updated at 09:25:34 GMT
(ScrapMOnster): Chinese prices of steel used mostly to build homes and offices fell to a 12-year low as peak construction season begins to ebb in the world’s biggest consumer.

The average spot price of steel reinforcement bar, or rebar, dropped for a 10th day to 2,458 yuan ($396) a metric ton, the lowest level since January 2003, according to data from Beijing Antaike Information Development Co.

Spot rebar is 11 percent lower this year after four straight annual drops as a prolonged slump in China’s property sector has hurt steel demand. Prices have fallen after reaching a two-month high in March ahead of the usual peak-demand period from April to June. New home prices slid in 69 of the 70 cities tracked by the government in April from a year earlier, National Bureau of Statistics said on Monday.

“For downstream industries like construction, we’re already at the peak of the season or already passed it,” said Ginger Ding, an analyst at Metal Bulletin Research in Shanghai.

China’s steel demand slumped 6 percent in the first quarter and may have peaked over the long term, the China Iron and Steel Association said last month.

Crude-steel production in April slid 0.7 percent from a year earlier to 68.91 million tons, while investment in fixed assets expand at the weakest in almost 15 years, the statistics bureau said last week. Infrastructure and construction together account for about two thirds of China’s steel demand, according to HSBC Holdings Plc.

The contract on the Shanghai Futures Exchange fell on April 10 to the lowest since trading began in 2009. Futures retreated 1 percent to close at 2,349 yuan a ton. Iron ore with 62 percent content at Qingdao declined 1.6 percent to $61.31 a dry ton on Friday, according to Metal Bulletin Ltd.

"Without a major injection of stimulus into China’s economy, we think that prices will come under pressure again as demand moves out of peak season,” HSBC analysts wrote in a note May 18.

Courtesy : Bloomberg