BEIJING: Ferrous futures in China declined on Tuesday, with Shanghai steel products down more than 3% in early trade tracking a drop in raw material prices, disrupted by domestic coronavirus situation and the coming restocking plan.
China reported 55 new COVID-19 cases for Jan.11. Hebei has stepped up restrictions to stop further infections, though it also hampered steel mills’ outbound transportation.
Meanwhile, the winter restocking for steel products - normally weeks ahead of the Chinese New Year holidays - also disrupted steel prices.
“Considering off-peak season has arrived... market will not accept high profit margins for steel products,” analysts with Huatai Futures wrote in a note.
Most active steel rebar contract on the Shanghai Futures Exchange, for May delivery, fell 2.5% to 4,296 yuan ($664.20) a tonne as of 0200 GMT.
Hot rolled coil, used in the manufacturing sector, slipped 2.6% to 4,429 yuan a tonne.
Both contracts fell more than 3% earlier in the session.
Stainless steel futures, for March delivery, dropped 3.3% to 13,735 yuan per tonne. It was down as much as 4.4% earlier in the session.
Prices for steelmaking ingredients also fell.
Benchmark iron ore futures on the Dalian Commodity Exchange were down 1.6% to 1,031 yuan a tonne.
Coking coal fell 2.8% to 1,728 yuan per tonne and coke down 3.9% to 2,756 yuan.