Chinese Steel Now Almost as Cheap as Cabbage… Not the Money Kind, Actual Cabbage

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Data from the China Iron & Steel Association (CISA) showed Monday that domestic steel prices have been falling for 12 straight weeks, with the Steel Composite Price Index down more than 13% compared since the end of last year, even as the nation’s construction activity and real-estate market are cooling significantly.

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The average price for the range of steel products on offer has fallen to 3,212 yuan ($520) per metric ton for the first half of the year, down 28% from the average price in 2012, CISA data showed.

And as a People’s Daily report said Monday, the price level means the steel is now almost as cheap by weight as Chinese cabbage.

“Sharply slowing steel demand growth in an oversupplied sector is the key reason for China’s currently low steel prices,” CIMB analysts said in a recent note.

Standard & Poor’s also cited Chinese oversupply as the largest headache for steel makers in the rest of Asia, and is likely to remain so.

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Chinese steel prices were flat for the day. The price of iron ore 58% fines from India hit a high price of CNY 840.00 ($136.77) and a low price of CNY 830.00 ($135.14) per dry metric ton. For the fifth consecutive day, the price of Chinese HRC held flat at CNY 3,030 ($493.34) per metric ton. The price of Chinese coking coal remained essentially flat at CNY 1,390 ($226.32) per metric ton.

The cash price of steel billet held steady on the LME at $450.00 per metric ton. The 3-month price of steel billet saw little movement on the LME at $455.00 per metric ton.

The US HRC futures contract 3-month price remained essentially flat at $626.00 per short ton. The spot price of the US HRC futures contract was unchanged at $637.00 per short ton.

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