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UPDATE 1-China steel futures ease off 2-week highs on demand concerns

UPDATE 1-China steel futures ease off 2-week highs on demand concerns

Reuters · 09/14/2022 03:29
UPDATE 1-China steel futures ease off 2-week highs on demand concerns

Global macro headwinds hit ferrous complex

Iron ore futures, other steel inputs fall

Updates prices

By Enrico Dela Cruz

- Chinese steel futures fell on Wednesday after hitting two-week highs in the previous session, dragging down the prices of steelmaking ingredients including iron ore as global economic headwinds added to worries about demand for ferrous metals.

Concerns over a rapid rise in steel production in recent weeks amid a fragile domestic demand recovery, and the prospect of intensified COVID-19 restrictions in China also weighed on the ferrous complex.

The most-traded January rebar contract on the Shanghai Futures Exchange SRBcv1 ended daytime trade 1.3% lower at 3,741 yuan ($537.07) a tonne, snapping a three-session rally.

Hot-rolled coil SHHCcv1, which is steel used in producing home appliances and car bodies, fell 1.6% to 3,800 yuan a tonne, while stainless steel SHSScv1 dropped 1.8% to 17,065 yuan a tonne.

Asian shares tumbled, the dollar held firm and two-year Treasury yields hit a 15-year high, as a U.S. inflation report dashed hopes for a peak in inflation, fuelling bets rates may have to be raised higher for longer.

"Overseas interest rate hikes are detrimental to global commodities," analysts at Zhongzhou Futures said in a .

China is the world's biggest producer and exporter of steel.

The most-active January iron ore contract on China's Dalian Commodity Exchange DCIOcv1 dipped 0.7% to 720.50 yuan a tonne, also pulling back from a two-week peak. Coking coal DJMcv1 and coke DCJcv1 shed 0.6% and 0.1%, respectively.

On the Singapore Exchange, benchmark October iron ore SZZFV2 slumped 2.8% to $100.45 a tonne.

"If the (steel) demand in the peak season cannot be sustained, there will still be pressure to reduce excess production in the later period," Zhongzhou analysts said, referring to a seasonal increase in construction activity in China in September and October ahead of winter.

A typhoon, meanwhile, gained strength in the East China Sea, which could interrupt construction and other activities in China.



(Reporting by Enrico Dela Cruz in Manila; Editing by Rashmi Aich and David Evans)

((enrico.delacruz@thomsonreuters.com))