Chinese rebar and iron ore
futures inched up on Monday morning, prolonging a rebound that
began last Wednesday amid thin trading volumes, but with spot
iron ore down over 3 percent last week, few expect any sustained
upturn in fortunes.
The most-traded May rebar contract in Shanghai
ended Monday morning up 0.2 percent at 2,584 yuan a tonne. Iron
ore for May delivery on the Dalian Commodity Exchange
ended 0.8 percent higher at 489 yuan a tonne.
Benchmark 62 percent grade iron ore for immediate delivery
to China .IO62-CNI=SI slipped 0.2 percent to $68.70 a tonne on
Friday, ending the week down 3.1 percent, according to data
compiled by The Steel Index.
In an assessment of the iron ore market published on Friday,
the China Iron and Steel Association (CISA) said there was
little likelihood of any immediate improvement in demand in the
coming weeks, adding that traders have been slashing their
orders since November.
It said some restocking was expected in December, but few
expect it to be enough to offset the seasonal decline in demand
or lead to any significant upturn in prices.
"You can say conditions are very poor right now, and even if
you add on the winter restocking demand, it is unlikely to lead
to any breakthrough," said Zhou Xiaocheng, a manager at the
Tangsong Steel Economic Research Institute in Tangshan, a major
steel producing city in Hebei province.
Zhu Jimin, CISA's vice-chairman, said at the end of last
week that China's mills were now adjusting to a "new normal" in
which the strongest would thrive while the weakest went under.
Data from China's National Bureau of Statistics at the end
of November showed that despite weak prices and persistent
overcapacity problems, six of the country's 10 biggest steel
enterprises raised output from January to October.
According to CISA, the profits of its 88 member firms are
also set to reach a three-year high this year.
Analysts at online steel trading portal GTXH.com said in a
note on Monday that the market was anticipating further interest
rate cuts and pro-growth policies, as well as fresh steel
capacity restrictions as a new environmental law goes into
effect, but market fundamentals remained weak.
Source: Reuters