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Steel prices on China’s Shanghai Futures Exchange were range-bound on Wednesday as investors sit tight amid the still sluggish downstream demand and an outlook for recovering production next month.
Seasonal steel consumption is weak and speculative trading demand is extremely low, analysts with Huatai Futures wrote in a note, adding that there is limited room for gains in steel rebar while production resumption at mills in January also weighs on prices of flat products.
Still, market sentiment was somewhat supported by Beijing saying it would appropriately front-load infrastructure investments to stabilise the economy.
The most-traded construction rebar futures on the Shanghai bourse, for May delivery, edged 0.3% lower to 4,315 yuan ($677.22) per tonne at close.
Shanghai hot rolled coils futures, used in the manufacturing sector, ended up 0.3% at 4,456 yuan per tonne and stainless steel prices increased 0.5% to 16,890 yuan a tonne.
An official from the China Iron and Steel Association said on Tuesday the country’s steel production is expected at around 1.03 billion tonnes here in 2021, down from the record output of 1.065 billion tonnes last year.
Meanwhile, the country’s industry ministry said in a five-year development plan that China’s steel capacity “will only decrease” by 2025 and it will explore staggered production mechanism for the sector.
Prices for steelmaking ingredients on the Dalian Commodity Exchange were mixed.
Benchmark iron ore futures declined 1.9% to 663 yuan a tonne, tracking the drop in spot 62% iron ore, which fell $3.5 to $123 a tonne on Tuesday, according to SteelHome consultancy. SH-CCN-IRNOR62
Analysts with SinoSteel Futures expect iron ore prices will further drop in 2022 due to China’s steel output controls and stable supplies from major miners.
Dalian coking coal futures closed up 1.3% at 2,186 yuan a tonne and coke prices rose 0.7% to 2,934 yuan per tonne.