Chinese Steel Futures Drop as Surplus Persists

China’s steel futures dropped on Monday, ending 3 sessions of gains after surveys showed the country’s manufacturing activity shrank for the first time in over two years.

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Slowing steel demand during winter in the world’s largest producer also dragged on prices.

The most-traded May rebar contract on the Shanghai Futures Exchange was down 0.4% at 2,489 yuan ($398). The futures price has already fallen 3.7% so far this year.

China’s Purchasing Manager’s Index showed the factory sector unexpectedly shrank for the first time in nearly 2-1/2 years in January, and firms saw more gloom ahead.

Chinese steel prices were mixed for the day. The price of iron ore 58% fines from India hit a high price of CNY 840.00 ($134.49) and a low price of CNY 840.00 ($134.49) per dry metric ton. The price of Chinese HRC fell to a 30-day low at CNY 2,530 ($405.08) per metric ton after shifting 3.1%. Following a 1.3% rise last Friday, the price of Chinese slab closed at CNY 2,360 ($377.86) per metric ton.

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The steel billet cash price saw essentially no change on the LME for the fifth day in a row, remaining around $500.00 per metric ton. The steel billet 3-month price held steady on the LME at $480.00 per metric ton.

US HRC futures contract 3 month saw its price drop 3.8% to a 30-day low of $550.00 per short ton last Friday. After falling 1.0% to $577.00 per short ton, the US HRC futures contract spot price reached a 30-day low.

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