Shanghai steel futures slipped on Friday, with hot-rolled coil hitting its lowest in six weeks, as worries about demand prospects and excessive supply in top consumer and producer China weighed on prices. The Chinese steel benchmarks also posted losses on a weekly basis as the market shrugged off positive headlines around US-China trade talks and new anti-pollution production curbs in Tangshan city.
The most-traded hot-rolled steel coil, used in cars and home appliances, on the Shanghai Futures Exchange ended down 1% at 3,372 yuan ($474.62) a tonne, after falling to 3,345 yuan earlier in the session, its weakest since August 29.
Construction material rebar edged down 0.2% to 3,407 yuan a tonne.
"The combination of weak demand and relatively high supply is weighing on steel prices," said Richard Lu, senior analyst at metals consultancy CRU in Beijing. The outlook for Chinese and global demand for steel remains clouded as economic growth has slowed amid the protracted trade tensions between China and the United States.
China's annual GDP growth in the third quarter is seen moderating to 6.1%, from 6.2% in the June quarter, HSBC said. "Investment slowed as business confidence fell from growing global uncertainties. Overall, these headwinds are outweighing the policy easing, which remains gradual for now," HSBC economists said in a note.
Reports that China's top steelmaking city of Tangshan has issued new anti-pollution restrictions on mill operations, effective from Oct. 10 to Oct. 31, did not help to stem the decline in steel futures prices. The impact of reduced sintering, pelletizing and blast furnace operations of steel mills in Tangshan is expected to be offset, or limited, as production in other places in China continues as normal, CRU's Lu said.
Some restocking demand pushed iron ore futures higher, offsetting the impact on demand of the restrictions in Tangshan. China launched a new audit into environmental compliance in the northern industrial province of Hebei. Tangshan issued guidelines to prosecute companies and individuals found guilty of pollution offences, amid warnings it may miss its air quality goals for this year.
Most-traded iron ore on the Dalian Commodity Exchange climbed 1.9% to 658 yuan a tonne, buoyed after data this week showed declines in shipments to China from Brazil and Australia's Port Hedland in September.
Dalian coking coal ended steady at 1,250 yuan a tonne, while coke edged up 0.5% to 1,862 yuan. Shanghai stainless steel was up 0.4% at 15,745 yuan a tonne. Top US and Chinese negotiators wrapped up a first day of trade talks in more than two months on Thursday as business groups expressed optimism the two sides might be able to ease a 15-month trade war and delay a US tariff hike scheduled for next week. The European Commission has opened an investigation into whether China and Indonesia are dumping hot-rolled stainless steel, used in car frames and machinery, in the European Union.
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