China rebar steel futures fell more than 2% to their lowest in nearly six weeks recently weighed by a hazy outlook for demand in the world largest consumer and thinning appetite for key raw material iron ore.
The most traded January rebar contract on the Shanghai Futures Exchange slid 2.4% to CNY 4,621 by the midday break. It dropped to as low as CNY 4,614 earlier it's weakest since August 9.
Traders said September and October are normally strong consumption periods for steel in China but Beijing credit tightening campaign has hurt demand and the boost from the government cheap housing project is waning.
A shipping manager for an iron ore trading firm in Shanghai said "Steel demand is not that strong, possibly because demand from the affordable housing project is dropping. There are no official figures but probably about 80% of the project is either completed or work has already started."
China bid to build 10 million social housing units this year had helped push mills to produce steel at a record pace with average daily output staying above 1.9 million tonnes from late February compared with 1.7 million tonnes in 2010. But now there are concerns the world largest steel producer may be facing a huge surplus if demand doesn't pick up before winter.
The Shanghai based shipping manager said "October would be the last chance for steel prices to rebound since demand normally slows during winter."
source: Reuters
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