In Commodity News 09/04/2015
Chinese rebar futures dropped for the sixth straight session to touch a record low on Wednesday as weak demand and ample supply in the world’s top steel consumer continues to weigh on prices.
A rapid decline in iron ore prices has allowed Chinese steel mills to produce rebar at lower costs, encouraging investors to increase their short positions in expectation of further declines ahead for steel.
“Steel mills are making better profit thanks to shrinking raw material costs and starting to resume production, despite weak sales, and this will continue depressing prices,” said Shang Jinyu, an analyst at Central China Futures in Zhengzhou.
The most-traded October rebar contract on the Shanghai Futures Exchange hit a session low of 2,284 yuan ($368) a tonne, its weakest since the launch of the contract in 2009.
At 0316 GMT, it was trading at 2,289 yuan, down 1.5 percent from the previous session’s finish.
Iron ore futures also fell on Wednesday, giving up gains from the previous session, as growing supplies and China’s subdued demand put downward pressure on the raw material.
The most-active September contract on the Dalian Commodity Exchange was down 0.3 percent at 384 yuan a tonne.
A global glut and collapsing Chinese demand have prompted money managers to nearly double their short positions in iron ore futures and options on the New York Mercantile Exchange since the start of 2015.
Benchmark 62 percent grade iron ore for immediate delivery to China .IO62-CNI=SI rose 1.9 percent to $47.60 a tonne on Tuesday, still hovering near its lowest levels since The Steel Index began compiling the prices in late 2008.
