Shanghai steel futures slide on virus concerns, winter restock
Steel futures in China declined on Tuesday, with Shanghai steel products down more than 3%, as they tracked a drop in raw material prices following disruptions caused by the domestic coronavirus situation and the winter restocking plan.
China reported 55 new COVID-19 cases for Jan.11. Hebei has stepped up restrictions to stop further infections, though it also hampered steel mills’ outbound transportation.
Meanwhile, the winter restocking for steel products – normally weeks ahead of the Chinese New Year holidays – also disrupted steel prices.
“Considering off-peak season has arrived… market will not accept high profit margins for steel products,” analysts with Huatai Futures wrote in a note.
Most active steel rebar and hot rolled coil futures on the Shanghai Futures Exchange closed down 1.8% at 4,327 yuan ($669.46) and 4,462 yuan a tonne, respectively.
Both contracts fell more than 3% during the session.
Stainless steel futures, for March delivery, dropped 2.2% to 13,905 yuan per tonne. It was down as much as 4.4% earlier in the session.
Coking coal futures on the Dalian Commodity Exchange ended down 2.4% at 1,735 yuan a tonne.
Coke dropped 3.3% to 2,773 yuan a tonne.
The plunge in coke prices came after market expectations that new coke capacity could be released in the first half of the year to ease supply shortages, said Huatai Futures.
Benchmark iron ore futures on the Dalian bourse, however, inched up 0.1% to 1,049 yuan a tonne at close.
Spot prices of iron ore with 62% iron content for delivery to China SH-CCN-IRNOR62 fell $1.5 to $171 per tonne on Monday, according to SteelHome consultancy.
Source: Reuters (Reporting by Min Zhang and Shivani Singh; Editing by Shailesh Kuber and Uttaresh.V)