What’s new: Steel prices in China are extending a downward trend this year as demand remains sluggish and government deleveraging efforts add uncertainties to the market outlook.
The main futures contract for rebar — reinforced steel bars — closed at 3,606 yuan ($501.8) a ton Monday, down 2.41% for the day and a near 6.5% drop since the start of the week-long break for the Chinese New Year on Feb.8. Hot-rolled coil futures closed down 1.95% at 3,767 yuan a ton, a 5.5% drop from before the holiday.
Futures contracts of iron ore, the steelmaking material, also dropped 5.41% to 831 yuan per ton on Monday, marking a 13.75% fall since before the holiday.
Customs data showed that China’s steel exports amounted to 15.9 million tons in the first two months, marking a 32.6% increase year-on-year. However, the average export price was $791.7 a ton, down 32.1% from a year ago.
The context: The steel market’s persistent decline is partly due to business disruption caused by this year’s longer-than-usual Chinese New Year holiday, according to Cai Yongzheng, director of Jiangsu Fushi Data Research Institute.
Demand has been picking up slowly since the holiday due to the sluggish real estate market. Meanwhile, local governments’ strengthening efforts to reduce debt piles are dampening demand from infrastructure construction, according to Cai.
According to industry portal 100njz.com, the resumption rate at 10,094 construction sites across the country was at 62.9% as of March 5, marking a 13.6 percentage point decrease from the same period last year. Data from Mysteel.com showed that the cumulative consumption of the five major types of steel materials during the first 10 weeks of this year totaled 72.53 million tons, down 10% from the same period last year.
Contact reporter Han Wei (weihan@caixin.com)
