BEIJING: Chinese steel futures showed little reaction to the plunge in the Shanghai stock markets during morning trade Monday, while physical prices extended falls for the ninth straight week, led by weaker spot rebar.
The most active May rebar contract on the Shanghai Futures Exchange last traded at Yuan 2,504/mt ($403/mt) as of 11:30 am (0330 GMT), down Yuan 6/mt, or 0.2%, from Friday’s close. Hot rolled coil futures for the same month were down Yuan 12/mt, or 0.4%, to Yuan 2,670/mt.
While Chinese steel futures — usually more sentiment driven than the physical steel market tend to track equities more closely, prices did not fall in line with the equities market, given the plunge in the stock market was unusually large.
The Shanghai Composite Index fell as much as 6.5% by mid-day Monday, roiled by news of a move by regulators to curb margin trading at three major securities brokerages, local media reported.
Meanwhile, physical prices were largely lower Monday, led by weak demand for rebar.
In Shanghai, 18-25mm diameter HRB400 rebar slipped Yuan 30-40/mt to Yuan 2,450/mt ex-stock, after having fallen for the ninth week on Friday. The prices are on a theoretical weight basis and include 17% VAT.
A trader in Beijing said he lowered his offers for same grade rebar to Yuan 2,220-2,230/mt from last week’s Yuan 2,240-2,250/mt, but still failed to attract any buying.
Rebar, a key product used in construction, is falling on weak demand, traders said, even as December new home sales data released Sunday indicated an improvement of 9% in 70 surveyed cities from the previous month.
Sales of new homes in four major cities — Beijing, Shanghai, Guangzhou and Shenzhen — all rose by more than 15% from the previous month, higher than the national average, said the National Bureau of Statistics.
But prices across the 70 cities fell by an average 0.2% in December from November, compared with a decline of 0.4% in November.
