China steel, iron ore futures post worst month on record
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ScrapPrices
Published on May 31,2016 07:47 AM Steel
Chinese steel and iron ore futures posted their sharpest monthly falls on record in May on weaker seasonal demand, with the industrial raw materials expected to face more pain in June due to rising steel supply in the world's top producer.
China steel, iron ore futures post worst month on record

Reuters - Chinese steel and iron ore futures posted their sharpest monthly falls on record in May on weaker seasonal demand, with the industrial raw materials expected to face more pain in June due to rising steel supply in the world's top producer.

May's decline follows a spectacular December to April rally fuelled by optimism about China's economy. The buying intensified last month, swelling prices and volumes across Chinese commodities as a buying frenzy in steel-linked futures spread in everything from cotton to eggs.

But sentiment soured in May as recent indicators from retail sales to trade suggested a solid recovery was not yet in place and after exchanges put in trading curbs.

The price surge pushed many shuttered Chinese steel mills to resume operations, increasing supply that could keep steel markets under pressure as seasonal demand slows down with hot weather curbing construction activity from June.

These mills "just don't start and stop with the flows of seasonal demand," said Daniel Hynes, senior commodity strategist at ANZ Bank.

"We'd expect those to remain open for the time being and that probably should result in steel production holding up relatively well despite that normal seasonal slowdown."

The most-traded rebar on the Shanghai Futures Exchange closed 0.8 percent lower at 1,978 yuan ($300) a tonne.

Rebar, or reinforcing steel used in construction, has fallen 29 percent from its April peak. For the month, it lost 23 percent, the most since the Shanghai exchange launched rebar futures in 2009.

On the Dalian Commodity Exchange, the most-active iron ore gained 0.3 percent to 344 yuan a tonne. The contract was down 32 percent from April's high and 25 percent over May, its biggest monthly decline since launch in 2013.

Courtesy : Reuters

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