China's steel prices eased on December 6 after surging nearly 2.5% in the previous session, as worries about oversupply and weak demand resurfaced.
Earlier market talks on potential production restriction in top steelmaking city Tangshan were proved to be inaccurate, according to reports on industrial websites, citing managers who attended a meeting summoned by the local government.
"Steel prices remain under pressure of high output at steel mills as expectation of tight supply collapsed of itself," analysts from Huatai Futures said in a note.
The most-active construction steel rebar futures on the Shanghai Futures Exchange fell 1% to 3,375 yuan/t ($489.85/t) when market closed at 0700 GMT, after hitting their highest since November 19 earlier in the session at 3,473 yuan/t. On November 5, it jumped as much as 4.1% before closing 2.4% higher.
Spot steel prices rose less than 0.2% to 4,044.39 yuan/t, data showed, with a total of 165,500 tonnes of rebar being traded on November 5 across the country.
The average daily crude steel output at member mills of the Chinese Iron and Steel Association (CISA) reached 1.95 million tonnes between November 21 and 30, up 1.8% from November 11-20, data from the group showed.
Steel inventory at mills also increased over the same period, up 8.52% to 13.27 million tonnes, CISA data showed, indicating inactive restocking intention among traders amid glut concerns.
Prices of steelmaking raw ingredients were also mostly subdued on November 6.
Dalian coke contract, which rose nearly 4% in the previous session, dropped 2% to 1,932.5 yuan/t. Coking coal futures recovered from earlier loss and closed 1.3% up to 1,423 yuan/t.
Iron ore futures on the Dalian Commodity Exchange also dipped, down 0.7% at 469 yuan/t, but analysts expect firm demand from steel mills would support iron ore prices.
"With falling profit margins, steel mills would reduce input of scrap steel during iron-making process, which will give more space for iron ore consumption," said Huatai analysts.
Source:sxcoal
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