Chinese rebar slips, sector revival seen unlikely as winter loomsFri Oct 31, 2014 1:33pm IST
By David Stanway
BEIJING, Oct 31 (Reuters) - Shanghai rebar futures were pegged back again on
Friday with still no obvious signs that China's struggling steel sector will
regain any lost ground in the weeks to come, especially as demand starts to slow
in the last two months of the year.
The most traded rebar contract on the Shanghai Futures Exchange
ended the day at 2,565 yuan per tonne, down 1.16 percent and shedding some of
the gains made over the last two days.
The most active iron ore contract on the Dalian Commodity Exchange
edged down 0.37 percent to end the week at 532 yuan per tonne.
The market appears to have already factored in any possible supply cuts as a
result of measures aimed at reducing smog during the Asia Pacific Economic
Cooperation summit in Beijing next month.
Mills have also been adjusting their production schedules to make sure
disruptions are minimised.
October is normally a strong month for the steel sector in China, but a
combination of weakening economic growth and massive industrial overcapacity has
driven product prices down to multi-year lows. Buyers remain cautious about
making any big iron ore purchases.
Benchmark 62 percent iron ore for immediate delivery into China
.IO62-CNI=SI rose 0.5 percent overnight on Thursday to $79 per tonne,
rebounding after five consecutive daily declines.
Traders said they expect prices to remain more or less the same for the rest
of the year, having barely changed in October. The Steel Index benchmark
fluctuated between a high of $83.1 and a low of $78.6 during the month.
Once hopeful for stimulus, the sector has generally come to terms with the
idea that there is still more painful restructuring to come, as Beijing
continues to press local governments to tackle pollution and overcapacity.
The government of Hebei, China's biggest steel producing province, said on
Thursday it had already closed 12 million tonnes of iron smelting and 9.77
million tonnes of steel production capacity in the first 10 months of the year.
China's biggest listed steel company, the Shanghai-based Baoshan Iron and
Steel Corp (Baosteel), announced on Thursday that its net profit
rose 7.9 percent to 5 billion yuan in the first three quarters of the year.
However, at an online session with shareholders on Friday, President Dai
Zhihao maintained a downbeat assessment of the sector, saying the company
expected steel prices to remain at a low level next year, especially as
oversupply in the iron ore sector worsens.
As for iron ore prices, Dai said they were "still looking for their bottom".
Rebar and iron ore prices at 0801 GMT
Read more:
http://in.reuters.com/article/2014/10/31/markets-ironore-idINL4N0SQ5PQ20141031