What’s new: Iron ore and steel rebar futures continued to decline in China this week on expectations of weakening demand.
It came after the nation’s top economic planner pledged to stick with cuts to crude steel production, and as Covid flare-ups threatened to further subdue construction demand already weakened by property sector turmoil.
On Monday, the Dalian Commodities Exchange’s most-traded iron ore futures contract plummeted 10.73%, while the Shanghai Futures Exchange’s most-traded steel rebar contract slid 4.73%.
The decline continued Tuesday when the iron ore contract — set to expire in September — dropped a further 2.53% to 809 yuan ($123) per ton. Meanwhile the steel rebar contract — for October delivery — slipped 0.07% to close at 4,829 yuan per ton on Tuesday.
Background: Last week, the National Development and Reform Commission announced that it would continue a drive to reduce Chinese steel production, after annual output fell in 2021 for the first time in six years.
In the first quarter of 2022, China's crude steel output fell 10.5% year-on-year to 243 million tons, according to the National Bureau of Statistics. On the demand side, domestic crude steel consumption slipped 9.5% year-on-year to 235 million tons, according to the China Iron and Steel Association.
Steel is made from iron ore, and steel rebar, short for “reinforcing bar,” is a toughened steel rod used in construction to increase the tensile strength of concrete.
Contact reporter Manyun Zou (manyunzou@caixin.com) and editor Flynn Murphy (flynnmurphy@caixin.com)
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