MANILA: China's steel prices tumbled more than 5 percent to a five-month low on Monday as persistent worries over weaker demand pushed the sector into a bear market, sparking a selloff in raw materials iron ore and coking coal.
The most actively traded rebar contract on the Shanghai Futures Exchange fell as far as 3,496 yuan ($504) a tonne, its lowest since June 26 and losing 21 percent since hitting a seven-year peak of 4,418 yuan in August.
The construction steel product closed down 3.8 percent at 3,553 yuan.
With steel prices coming from a high point, "the panic selling is unavoidable," said Richard Lu, analyst at CRU consultancy in Beijing.
As China dials down on anti-smog production curbs this winter, steel supply in the world's top producer and consumer of the material had been rising while demand is weaker as the cold weather slows the construction sector.
The concern among many is consumption may not recover strongly in the spring with China's economy under pressure from faltering consumer spending and property sales, and with Chinese exports to the United States expected to slide soon as higher U.S. duties start to bite.
Steel traders are not replenishing stockpiles on concerns demand could remain weak, with the Chinese economy cooling further amid an ongoing trade war with the United States.
Rebar stocks at Chinese traders dropped to 3.08 million tonnes in mid-November, the lowest level this year, according to data tracked by SteelHome. <SH-TOT-RBARINV>
The falling stockpiles show traders are not restocking steel, said a Shanghai-based trader.
"Traders are trying to sell out all their stocks or not buy any new stocks because demand is getting weaker," he said.
The most-traded January iron ore on the Dalian Commodity Exchange slid by its downside limit of nearly 6 percent to settle at 477.50 yuan a tonne, the lowest since Aug. 30.
Stocks of iron ore at China's major ports rose 350,000 tonnes from the previous week to 140.95 million tonnes on Nov. 23, SteelHome data showed. <SH-TOT-IRONINV>
Coke futures slumped 5.2 percent to 2,115 yuan per tonne, while coking coal fell 4 percent to 1,297 yuan.
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