* Shanghai rebar down 2.3 pct on week, biggest since mid-June
* Other Shanghai commods plunge amid risk aversion
* Fall in rebar price may halt run-up in iron ore prices
By Ruby Lian and Manolo Serapio Jr
Shanghai/Singapore (Reuters) - Shanghai rebar steel futures fell more than 2 percent to their lowest in nearly a month on Friday, joining a rout in other commodities as investors exited riskier assets amid worries about a slowing global economy.
Fears that the U.S. economy could slip back to recession and a recent jump in Italian and Spanish bond yields towards danger levels have pushed investors to seek cover, pulling out of commodities from oil to base metals and grains and driving Asian stocks down around 5 percent after the worst sell-off on Wall Street since the global financial crisis.
Other Shanghai-traded commodities also fell sharply, with aluminium and zinc sliding by the daily trading limit.
The drop in rebar futures raised concern it could snuff out a recent run-up in prices of iron ore, the key steelmaking raw material, which had been spurred by rising steel prices.
"Market sentiment has been hit by worries over a slowing global economy and I am concerned that there will be a temporary end to the current upward trend in iron ore prices next week if steel prices continue to fall," said Zhang Chunzi, a broker with SDIC CGOC Futures in Beijing
The most-active January rebar contract on the Shanghai Futures Exchange fell as low as 4,803 yuan ($746) per tonne, its lowest since July 6, before closing down 2.4 percent at 4,807 yuan.
The contract lost 2.3 percent this week, its biggest drop since mid-June.
Steel mills and traders in China, the world's top steel producer and iron ore consumer, have started to step back amid mounting global market jitters, which may exert downward pressure on steel prices as well as iron ore prices.
Chinese steel mills have been producing at a record daily pace of nearly 2 million tonnes, capitalising on strong demand for long steel products amid a brisk construction sector, largely driven by Beijing's campaign to build more cheap houses.
"Restocking as well as rising steel prices have encouraged Chinese steel mills to accept higher price offers for iron ore," said an iron ore trader in Shenzhen city.
"But we might see the uptrend braking if steel prices fall because that means margins of steel mills would shrink."
Fears over the global economy also triggered declines in prices of iron ore forward swaps <0#SGXIOS:> on Thursday, reflecting concern recent price gains in the physical market may not be sustained.
Offers for Indian ore fines with 63.5 percent iron content climbed to as high as $190 per tonne, including freight, this week, although actual deals were below that, at around $186-188, trading sources said.
However, analysts said continued tightness in iron ore supply from India, the world's No. 3 exporter, should keep losses in spot prices in check.
"The Indian authorities are looking to continue to crack down heavily on illegal mining activities which is starting to affect the domestic market as well as the international market," said Christopher Ellis, analyst with Metal Bulletin Iron Ore Index.
Exports from India's southern Karnataka state, which have been on hold, are unlikely to resume anytime soon despite the appointment of a new chief minister on Wednesday to replace a predecessor who quit over a $3.6 billion illegal iron ore mining scandal.
Karnataka, which accounts for about a quarter of annual iron ore exports from India, banned shipments from July last year. India's top court ordered the state to lift the ban in April but exports have yet to resume.
Key global iron ore indexes, tracking spot deals in China and used by global miners to determine contract prices, extended gains on Thursday to hit their highest since mid-May.
The Steel Index's 62-percent iron ore reference price .IO62-CNI=SI rose 20 cents to $177.90 a tonne, its highest since May 17, and a similar gauge by Metal Bulletin [.IO62-CNO=MB edged up 88 cents to $178.57, its loftiest since May 12.
Platts 62-percent index IODBZ00-PLT was unchanged at $179.50 a tonne. ($1=6.439 yuan)
(sourced Reuters)
* Other Shanghai commods plunge amid risk aversion
* Fall in rebar price may halt run-up in iron ore prices
By Ruby Lian and Manolo Serapio Jr
Shanghai/Singapore (Reuters) - Shanghai rebar steel futures fell more than 2 percent to their lowest in nearly a month on Friday, joining a rout in other commodities as investors exited riskier assets amid worries about a slowing global economy.
Fears that the U.S. economy could slip back to recession and a recent jump in Italian and Spanish bond yields towards danger levels have pushed investors to seek cover, pulling out of commodities from oil to base metals and grains and driving Asian stocks down around 5 percent after the worst sell-off on Wall Street since the global financial crisis.
Other Shanghai-traded commodities also fell sharply, with aluminium and zinc sliding by the daily trading limit.
The drop in rebar futures raised concern it could snuff out a recent run-up in prices of iron ore, the key steelmaking raw material, which had been spurred by rising steel prices.
"Market sentiment has been hit by worries over a slowing global economy and I am concerned that there will be a temporary end to the current upward trend in iron ore prices next week if steel prices continue to fall," said Zhang Chunzi, a broker with SDIC CGOC Futures in Beijing
The most-active January rebar contract on the Shanghai Futures Exchange fell as low as 4,803 yuan ($746) per tonne, its lowest since July 6, before closing down 2.4 percent at 4,807 yuan.
The contract lost 2.3 percent this week, its biggest drop since mid-June.
Steel mills and traders in China, the world's top steel producer and iron ore consumer, have started to step back amid mounting global market jitters, which may exert downward pressure on steel prices as well as iron ore prices.
Chinese steel mills have been producing at a record daily pace of nearly 2 million tonnes, capitalising on strong demand for long steel products amid a brisk construction sector, largely driven by Beijing's campaign to build more cheap houses.
"Restocking as well as rising steel prices have encouraged Chinese steel mills to accept higher price offers for iron ore," said an iron ore trader in Shenzhen city.
"But we might see the uptrend braking if steel prices fall because that means margins of steel mills would shrink."
Fears over the global economy also triggered declines in prices of iron ore forward swaps <0#SGXIOS:> on Thursday, reflecting concern recent price gains in the physical market may not be sustained.
Offers for Indian ore fines with 63.5 percent iron content climbed to as high as $190 per tonne, including freight, this week, although actual deals were below that, at around $186-188, trading sources said.
However, analysts said continued tightness in iron ore supply from India, the world's No. 3 exporter, should keep losses in spot prices in check.
"The Indian authorities are looking to continue to crack down heavily on illegal mining activities which is starting to affect the domestic market as well as the international market," said Christopher Ellis, analyst with Metal Bulletin Iron Ore Index.
Exports from India's southern Karnataka state, which have been on hold, are unlikely to resume anytime soon despite the appointment of a new chief minister on Wednesday to replace a predecessor who quit over a $3.6 billion illegal iron ore mining scandal.
Karnataka, which accounts for about a quarter of annual iron ore exports from India, banned shipments from July last year. India's top court ordered the state to lift the ban in April but exports have yet to resume.
Key global iron ore indexes, tracking spot deals in China and used by global miners to determine contract prices, extended gains on Thursday to hit their highest since mid-May.
The Steel Index's 62-percent iron ore reference price .IO62-CNI=SI rose 20 cents to $177.90 a tonne, its highest since May 17, and a similar gauge by Metal Bulletin [.IO62-CNO=MB edged up 88 cents to $178.57, its loftiest since May 12.
Platts 62-percent index IODBZ00-PLT was unchanged at $179.50 a tonne. ($1=6.439 yuan)
(sourced Reuters)
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