China's construction steel rebar futures fell to a one-month low on Wednesday, as supply glut concerns continued to weigh on market sentiment, offsetting the impact of overcapacity inspections. The most-active rebar contract for October delivery on the Shanghai Futures Exchange closed down 1.4 percent at 3,531 yuan ($553.44) a tonne, having earlier touched 3,511 yuan, its lowest since April 23.
Worries over a supply glut came as the utilisation rate at steel mills rose to 70.17 percent last week, a level seen before winter curbs took effect in early November, and industrial association data showed daily crude steel output by major steel firms hit a fresh record of 1.94 million tonnes over May 1-10.
Technical analysis also indicates a cautious move among investors, with the moving average convergence divergence (MACD) struggling below the zero line for a third session.
Rebar prices also broke through their 60-day moving average at 3,543 yuan a tonne, while the 5-day simple moving average fell below the 20-day SMA, in a formation known as a "death cross".
On Monday, China's state planner said it would send inspection teams to carry out overcapacity check at steel mills in 21 regions, including the key steelmaking provinces of Hebei, Jiangsu and Shandong, from May 22 to June 15.
"Surprise checks may affect production, but in general, steel output will remain at a high level. With demand getting tepid steel prices would be on a declining trend," said analysts at Orient Futures in a note.
Spot steel prices went down 0.3 percent to 4,299.02 yuan a tonne on Tuesday, data from Mysteel consultancy showed. Steelmaking raw materials fell alongside rebar prices. The most-traded iron ore futures on the Dalian Commodity Exchange closed down 0.7 percent at 456.50 yuan a tonne, falling for a sixth consecutive session and earlier touching their lowest since April 18.
Coking coal futures ended down 4.6 percent at 1,175.50 yuan a tonne after touching their weakest level since April 27 at 1,164.50 yuan a tonne. Coke for September delivery finished down 4.3 percent to 1,959.50 yuan a tonne its lowest close since May 4.
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