Reuters reported that hanghai steel futures extended losses on Thursday, falling to a two week low as investors saw little evidence demand would be boosted further amid a slow seasonal recovery.
The most traded October rebar contract on the Shanghai Futures Exchange fell to a low of CNY 4,313 a tonne on Thursday, its lowest since March 15.
A Shanghai based steel trader said “Steel prices have risen by over CNY 200 a tonne after the new year holiday, which was a relatively big rise, while demand isn't strong enough to support any further big gains in the near term.”
China's daily crude steel output rose 1.1 percent to 1.919 million tonnes between March 11 and 20 over the prior period, as mills ramped up production in expectation of improving demand in the world's largest consumer, with warmer weather encouraging construction activity.
Analysts remain wary that rapidly growing production could cap gains in steel prices, however, due to slower demand growth.
Mr Hu Zhengwu an analyst with industry consultancy Custeel.com said “Steel supply is rising rapidly, but we don't see much strength for demand to rise significantly in the near term, which will be likely to limit steel price gains. Investors saw little evidence for government policies to drive demand, and steel prices will find it difficult to climb a lot in the short term.”
Still, Mr Hu expected China's daily crude steel output to reach 1.95 million tonnes in March, versus daily production of 1.917 million tonnes a year earlier.
Sourced from - Reuters