SHANGHAI: Chinese steel futures edged up on Friday after falling for the previous four days, but was still set to post a weekly loss as sluggish demand and a supply glut weighs on prices in the world's biggest producer.
Apparent steel consumption in China, also the world's biggest consumer of the alloy, fell 4 percent to 740 million tonnes last year, as the country's economy grew at its slowest pace in almost a quarter of a century.
Despite slowing demand, China's crude steel capacity is still expected to grow this year as new projects come on stream, piling more pressure on mills that keep selling products at a loss to keep their market share.
The most-traded May rebar contract on the Shanghai Futures Exchange was up 0.1 percent at 2,482 yuan ($398) as of midday, but was set for a weekly loss of 0.7 percent.
A reduction in steel output by some Chinese mills in January may help limit further price losses, but slower demand overall will cap any upside potential.
"The leaner demand has forced some mills to have brought forward their annual maintenance plan, encouraging some investors to hope the output cut can ease the oversupply pressure," said Wang Nan, an analyst at Zheshang Futures in the eastern city of Hangzhou.
POSCO kept its 2015 spending target largely unchanged at 2.9 trillion won ($2.66 billion) this year as the world's sixth-largest steelmaker expects Chinese demand to remain sluggish.
Separately, restocking of iron ore by Chinese steel mills ahead of the Lunar New Year holiday that falls in mid-February has helped lifted prices of the steelmaking raw material, which is on track for the first weekly gain in four weeks.
However, the buying activity was limited as steel mills exercised caution on expectations that a persistent glut will keep prices under pressure.
Iron ore futures for May delivery on the Dalian Commodity Exchange was up 0.4 percent at 476 yuan as of midday, while the price has fallen 6.3 percent so far this year.
Benchmark 62 percent grade iron ore for immediate delivery to China fell 0.5 percent to $61.10 a tonne on Thursday, its lowest level since May 2009, according to data compiled by the Steel Index.
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