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PrintChinese steel futures hit a record low on Monday, falling below 3,600 yuan ($570) on festering worries over demand in the world's second-largest economy, with iron ore remaining trapped at a 2-1/2 year trough.
The most-traded rebar for January delivery on the Shanghai Futures Exchange dropped as low as 3,599 yuan per tonne, before closing half a percent lower at 3,607 yuan. Futures on rebar, used in construction, have declined 20 percent from the year's peak.
An unexpected rebound in steel output in top steel-producer China may curb any future gains as it could exacerbate a recent supply glut and high inventories, analysts said.
"Market fundamentals remain poor and rising output in early August further dampened sentiment," said Ding Rui, an analyst at Shanghai Zhongcai Futures. "I expect a weak rise in steel prices as they have largely fallen below production costs, while I don't see any big improvement in steel demand ahead."
Some traders said they were making a loss of about 300 yuan per tonne based on current prices.
China's daily crude steel output rose 1.1 percent to 1.970 million tonnes over Aug. 1-10 from July 21-31, belying expectations for a modest fall, as many steel mills resumed running after a round of brief maintenance in mid-July.
Iron ore with 62 percent iron content .IO62-CNI=SI, one of the industry benchmarks, fell 1.5 percent to $110.2 per tonne last Friday, the lowest since December 24, 2009.
Major Chinese steel mills have cut steel product prices for September bookings, illustrating how bearish they are on a market that traditionally sees demand recover in the autumn as construction projects speed up.
Major Chinese steelmaker Angang Steel Co Ltd cut its main steel product prices by 100-320 yuan for September bookings, traders said, after Baosteel reduced it September prices, the third cut since June this year.(Source: Reuters)
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