Chinese steel futures dropped for a third consecutive session on Tuesday on concerns that slower demand will persist next year, with prices of steelmaking raw materials coking coal and coke retreating. Underlining weaker consumption, leading steelmaker Baoshan Iron & Steel Co Ltd said on Monday it would cut prices of its key products for January delivery. Wuhan Iron and Steel Co also lowered its January prices.
The price of construction-used rebar on the Shanghai Futures Exchange closed down 0.5 percent at 3,327 yuan ($484) a tonne. Hot-rolled coil, used in manufacturing, slipped 0.1 percent to 3,309 yuan. Citing weaker car sales and lacklustre growth in infrastructure investment, Argonaut Securities analyst Helen Lau said she expects Chinese steel demand to slow down in 2019.
If China's steel exports remain weak, "that will increase the risks of oversupply in the domestic market," she said. China's steel shipments dropped nearly 9 percent to 63.78 million tonnes in January-November. "This continuous decline in steel exports happened when the yuan currency has been on a depreciation track this year. This shows the currency depreciation could not help China's steel exports," said Lau.
The drop in steel prices came even as the top steelmaking city of Tangshan ordered steel mills and other industrial plants to make further output cuts this month as part of emergency measures to fight smog. The most-traded coking coal on the Dalian Commodity Exchange fell 0.8 percent to 1,431.50 yuan. Coke slid 2.5 percent to 1,962.50 yuan per tonne, pulling back after recent gains, including a more than 5 percent spike on Friday. Iron ore futures gained 0.5 percent to 474.50 yuan.
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