Chinese steel futures range-bound on Omicron variant fears
Steel futures in China traded in a tight range on Monday, weighed by demand fears due to the new Omicron coronavirus variant, while coking coal and coke prices fell after a plunge in thermal coal futures.
“Affected by the new coronavirus variant, steel prices fell during night session out of panic,” GF Futures wrote in a note, adding that impact on actual demand and supply of the industrial metal could be limited.
Analysts with CITIC Futures also noted that commodity prices could be pressured by the pandemic situation in the short term but would be supported by easing property policy in China in the long run.
Construction used steel rebar on the Shanghai Futures Exchange SRBcv1, for May delivery, edged 0.9% lower to 4,145 yuan ($649.19) a tonne at close, after shedding 2.5% on Friday.
The January contract of hot rolled coils SHHCcv1, used in the manufacturing sector, dipped 0.9% to 4,533 yuan per tonne, a day after it closed down 1.4%.
Shanghai stainless steel futures SHSScv1 fell 2.6% to 17,170 yuan a tonne.
Prices for steelmaking ingredients on the Dalian Commodity Exchange were mixed.
Benchmark iron ore futures DCIOcv1 jumped 4.8% to 615 yuan a tonne, giving up some of its 6.1% surge earlier. The contract had declined 6.7% on Friday.
Spot prices of iron ore with 62% iron content for delivery to China SH-CCN-IRNOR62, compiled by SteelHome consultancy, fell $4.5 to $102 a tonne on Friday.
Coking coal and coke futures, however, tracked the drop in thermal coal prices CZCcv1 which were down 7.7% earlier during the session as government signalled more price regulations.
Coking coal DJMcv1 and coke DCJcv1 closed down 2.1% to 2,048 yuan per tonne and 2.8% to 2,599 yuan a tonne, respectively.
“Downstream steel demand is relatively weak, the pressure is conducting to coal,” according to the CITIC Futures note. “The lenient supply and demand in coking coal could further send down (steelmaking) costs.”
Source: Reuters (Reporting by Min Zhang in Beijing and Enrico Dela Cruz in Manila; Editing by Rashmi Aich and Uttaresh.V)