Steel futures in China edged down on Tuesday as more signs emerged that the world’s second-largest economy will continue to cool, renewing concerns about a weak demand outlook at a time when output remains high.
China’s steel industry will shift its focus in 2019 to optimising capacity structure, including products, location and ownership, from reducing overall capacity, Yu Yong, the chairman of China Iron and Steel Association told an industry meeting on Monday.
He acknowledged that the industry remains under pressure from oversupply due to illegally-added capacity and new projects as mills try to cash in on high profit margins.
The most-active construction steel rebar contract on the Shanghai Futures Exchange was down 0.9 percent at 3,521 yuan ($521.98) a tonne as of 0224 GMT, after hitting a two-month peak on Monday on restocking activities by steel traders.
Hot rolled coil dropped 0.9 percent to 3,411 yuan.
“Prices are still largely range-bound, moving up and down in small ranges,” said Richard Lu, analyst at CRU consultancy in Beijing.
“Just looking at the fundamentals of steel, there’s no big story in the market in general. Demand is currently low, but steel output remains high.”
China’s exports unexpectedly fell the most in two years in December, data showed on Monday, while imports also contracted, pointing to further weakness in the economy in 2019.
The most traded iron ore on the Dalian Commodity Exchange edged down 0.3 percent at 507 yuan a tonne, after Monday’s gains following Rio Tinto’s announcement that it had declared force majeure on some shipments after a fire hit its export terminal in Australia.
“The market remains concerned about potential disruptions at Cape Lambert (export terminal), which has been partially shut by Rio Tinto following a fire,” ANZ Research said in a note.
Coking coal slipped 0.6 percent to 1,235.5 yuan following recent gains. Coke was up 0.5 percent at 2,004.5 yuan.
Spot iron ore for delivery to China SH-CCN-IRNOR62 was steady at $74.80 a tonne on Monday, according to SteelHome consultancy.