Chinese steel futures fell on Wednesday, as raw material prices plunged amid government intervention to cool commodity prices, while demand for the industrial metal stayed subdued on output controls.
The most-active coking coal DJMcv1 and coke DCJcv1 futures on the Dalian Commodity Exchange opened down 9% at 2,704 yuan and 3,430 yuan, respectively, hitting their daily trading limits.
The plunge came as thermal coal CZCcv1 hit its 10% lower trading limit after the state planner said it had asked major coal producing provinces to probe and regulate illegal storage sites, and to crack down on hoarding behaviours.
Benchmark iron ore futures on the Dalian bourse DCIOcv1, for January delivery, closed up 1% to 707 yuan a tonne, recovering from 4.1% drop earlier during the session.
Spot prices of the steelmaking ingredient with 62% iron content for delivery to China SH-CCN-IRNOR62 remained unchanged at $121.5 a tonne on Tuesday, according to SteelHome consultancy.
Affected by energy consumption controls, environmental curbs during winter heating season and the Winter Olympics… steel supply is expected to be restricted continuously, iron ore demand will be dented in the long term,” analysts with CITIC Securities said in a note.
Steel rebar on the Shanghai Futures Exchange SRBcv1 slumped 4.3% to 4,655 yuan a tonne. Hot rolled coils SHHCcv1, used in cars and home appliances, declined 3.6% to 5,032 yuan per tonne at close.
Shanghai stainless steel futures SHSScv1 ended down 2.1% to 19,630 yuan a tonne.