Friday, March 29

China ferrous futures slump as COVID uncertainty stokes demand concerns


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BEIJING — Chinese steel futures prices fell on Monday, tracking lower raw material prices as still stringent COVID-19 related measures dented market sentiment and fueled worries that the recovery in the world’s second-largest economy might lose steam.

The most-active construction material steel rebar on the Shanghai Futures Exchange, for October delivery, slipped 3.1% to 4,870 yuan ($764.63) per tonne as of 0215 GMT.

Hot rolled coils futures, used in the manufacturing sector, fell for the fourth straight session and were down 3.1% to 5,028 yuan a tonne.

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The May contract of stainless steel futures on the Shanghai bourse plunged 5.1% to 19,165 yuan per tonne.

“Previous market expectation was that the (steel) demand would be postponed but not absent,” analysts with GF Futures wrote in a note.

“But as the current pandemic is continuously spilling over, there’s relatively big uncertainty in its disruptions to the economy,” said the note, adding that the consumption in April and May could be pressured.

China’s financial hub Shanghai, which had started lockdown since end-March, has reported around 180,000 locally transmitted infections between March 1 and April 9, of which 96% were asymptomatic.

Prices for steelmaking ingredients on the Dalian Commodity Exchange also declined.

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Benchmark iron ore futures, for September delivery, dived 5.2% to 863 yuan a tonne, posting their biggest percentage loss since March 15.

Spot iron ore prices, with 62% iron ore, dipped $1.5 to $155.5 a tonne on Friday, according to SteelHome consultancy.

“China’s COVID outbreaks, associated lockdowns, and the government’s handling of them will likely continue to dominate sentiment and direction for iron ore futures in the near term,” said Atilla Widnell, managing director at Navigate Commodities in Singapore.

Dalian coking coal futures fell 4% to 3,093 yuan a tonne and coke prices lost 3.4% to 3,923 yuan.

($1 = 6.3691 Chinese yuan renminbi) (Reporting by Min Zhang in Beijing and Enrico Dela Cruz in Manila)

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