China steel rebar, hot rolled coil fall for third day after hitting records

BEIJING: Chinese construction rebar and hot rolled coils futures declined on Monday, down for a third consecutive session after steel prices surged to historical highs last week and led regulators to step up inspections.

Data on Monday also showed record monthly crude steel output in China for April despite the government’s efforts to encourage cuts to production.

Surging steel prices have forced some construction firms to slow metal purchases while some exporters, hurt by rising commodity prices, have had to pass on increased costs to customers.

Regulators in Shanghai and steel hub Tangshan on Friday also warned local mills against price gouging, collusion or other irregularities that might disrupt market order, which is expected to help keep a lid on prices.

The most-traded steel rebar on the Shanghai Futures Exchange , for October delivery, fell 2.9% to 5,596 yuan ($869.32) a tonne at close. That compares with a record closing high of 6,171 yuan last Wednesday.

Hot rolled coils used in the manufacturing sector tumbled 5.1% to 5,949 yuan a tonne. It marked a record closing high of 6,683 yuan on Wednesday.

Fitch Ratings said in a note that it expects “the rally in China’s steel price to slow in coming weeks as summer approaches, as the season tends to see lower downstream demand due to subdued construction activity.”

It added that high prices for iron ore and new environmental curbs could keep steel prices elevated.

Benchmark iron ore futures on the Dalian Commodity Exchange, for September delivery, rose 0.9% to 1,198 yuan a tonne.

Dalian coking coal futures ended up 1.2% at 1,967 yuan per tonne while coke fell 1.0% to 2,634 yuan.

The July contract for stainless steel on the Shanghai bourse increased 1.0% to 15,285 yuan per tonne.