China’s steel rebar and hot-rolled coils futures dropped on Thursday, as downstream demand remained sluggish amid the fresh wave of COVID-19 cases while weaker iron ore prices also weighed on sentiment.
Steel consumption in March and April, the traditional peak season, has been sluggish this year as the pandemic disrupted industrial activities.
Apparent demand of five main steel products, including rebar, wire rod, hot-rolled coils and others, fell 3% this week from the week earlier, according to Reuters calculation based on production and inventory data released by Mysteel consultancy.
The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) and official data released last week showed manufacturing activities had contracted in March.
A regular state council meeting chaired by Premier Li Keqiang said on Wednesday the government would flexibly use multiple monetary policies in a timely way to support the real economy.
The most-traded steel rebar futures, used as construction material, on the Shanghai Futures Exchange SRBcv1 for October delivery fell 1.2% to 5,070 yuan ($797.16) a tonne at close.
Hot-rolled coils SHHCcv1, used in cars and home appliances, slipped 1% to 5,228 yuan per tonne. The country’s auto industry association expected China’s auto sales to plunge 11% in March on an annual basis.
Stainless steel futures on the Shanghai bourse SHSScv1, for May delivery, dipped 0.8% to 20,365 yuan a tonne.
Steel prices were also tracking falling raw material futures prices on the Dalian Commodity Exchange.
Benchmark iron ore futures DCIOcv1, for September delivery, declined as much as 3.9% to 892 yuan a tonne, retreating from an over 4% jump in the previous session. The ended down 3% at 900 yuan per tonne.
Spot 62% iron ore for delivery to China was unchanged for the third straight session and stood at $159.5 a tonne on Wednesday.
Other steelmaking ingredients were mixed, with Dalian coking coal prices DJMcv1 faltering 0.4% to 3,200 yuan a tonne while coke futures DCJcv1 edging 0.4% higher to 4,050 yuan per tonne.