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Chinese steel futures track raw materials lower

Chinese steel futures track raw materials lower

FILE PHOTO: Steel pipes are seen stacked at an industrial park in Shenyang, Liaoning province, China September 30, 2021. REUTERS/Tingshu Wang

BEIJING :Chinese steel futures fell on Wednesday, as raw material prices plunged amid government intervention to cool commodity prices, while demand for the industrial metal stayed subdued on output controls.

The most-active coking coal and coke futures on the Dalian Commodity Exchange opened down 9per cent at 2,704 yuan and 3,430 yuan, respectively, hitting their daily trading limits.

The plunge came as thermal coal hit its 10per cent lower trading limit after the state planner said it had asked major coal producing provinces to probe and regulate illegal storage sites, and to crack down on hoarding behaviours.

Benchmark iron ore futures on the Dalian bourse, for January delivery, closed up 1per cent to 707 yuan a tonne, recovering from 4.1per cent drop earlier during the session.

Spot prices of the steelmaking ingredient with 62per cent iron content for delivery to China remained unchanged at US$121.5 a tonne on Tuesday, according to SteelHome consultancy.

"Affected by energy consumption controls, environmental curbs during winter heating season and the Winter Olympics... steel supply is expected to be restricted continuously, iron ore demand will be dented in the long term," analysts with CITIC Securities said in a note.

Steel rebar on the Shanghai Futures Exchange slumped 4.3per cent to 4,655 yuan a tonne. Hot rolled coils, used in cars and home appliances, declined 3.6per cent to 5,032 yuan per tonne at close.

Shanghai stainless steel futures ended down 2.1per cent to 19,630 yuan a tonne.

FUNDAMENTALS

* China's cabinet issued an action plan to bring carbon emissions to a peak before 2030, urging to continue cut steel capacity, improve recycling rates of steel scrap, and promote electric arc furnaces technologies.

* China's industrial profits rose at a faster pace in September on strong profits at mining and raw material manufacturing sectors, though high commodity prices and supply-chain problems still weigh on companies' profitability, according to the National Bureau of Statistics.

(Reporting by Min Zhang in Beijing and Tom Daly; Editing by Subhranshu Sahu and Rashmi Aich)

Source: Reuters

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