Prices for Shanghai construction steel rebar slid 1.2 percent on Thursday, following four sessions of gains that were triggered by China's moves to boost infrastructure spending. The most-active rebar contract on the Shanghai Futures Exchange finished down 1.2 percent at 4,124 yuan ($602.14) a tonne, after climbing on Tuesday to its highest since Sept. 11 at 4,205 yuan a tonne.
The National Development and Reform Commission (NDRC), the top state planner in the country, said in a news briefing on Tuesday that China would ramp up investment in infrastructure, as well as in agriculture, poverty alleviation and environmental protection. That and a push to expand subway networks in some of China's biggest cities are helping brighten the outlook for the nation's mammoth steel sector.
The cities of Suzhou in eastern Jiangsu province and Changchun in northeastern Jilin province, as well as Shenzhen in the south, last month announced plans to spend the equivalent of billions of dollars boosting their underground systems by a total of around 1,600 kilometres (1,000 miles), gobbling up steel as they expand.
"The bulk commodity market was relatively subdued, with investors pausing for breath after a strong four-day rally," ANZ said in a report. "The sector had been buoyed by comments earlier this week from NDRC official Liu Shihu, who said they will work with local authorities to speed up preparatory work on major infrastructure projects."
Steelmaking raw materials also lost ground. Dalian iron ore futures gave up 1.4 percent to 502 yuan a tonne. The most-traded coking coal futures lost 2 percent to 1,276.5 yuan a tonne, while coke fell 0.4 percent to 2,312 yuan. "Steel demand is firm but has not reached a 'blowout level'...supply and demand are at balance at this moment, but such demand level is unlikely to stay for long time as construction activities will slow down with weather turns cold," said analysts from Orient Futures in a note.
Volumes at China's biggest physical iron ore trading platform may hit record levels this year, with demand for the steelmkaing raw material pushed up as steel output has been strong despite pollution-linked curbs, its president said.
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