Chinese commodity futures are getting hosed

Photo: Lam Yik Fei/Getty Images

Chinese commodity futures were slammed on Friday, continuing the sell off seen earlier in the week.

Here’s the final scorecard for Friday’s day session.

SHFE Copper ¥49,630 , -1.49%
SHFE Aluminium ¥16,585 , -3.10%
SHFE Zinc ¥24,675 , -2.97%
SHFE Nickel ¥82,880 , -5.07%
SHFE Rebar ¥3,554 , -4.54%
DCE Iron Ore ¥466.50 , -3.91%
DCE Coking Coal ¥1,210.50 , -4.87%
DCE Coke ¥2,032.00 , -5.40%

It was a sea of red, be it rebar, base or bulk commodities.

The losses were led by coke and coking coal futures with losses of 4.9% and 5.4% respectively.

Iron ore and rebar futures, often closely linked, also took a bath, losing 3.9% and 4.5% apiece.

“Demand for iron ore is expected to weaken in winter because steel factories will cut production and iron ore supply will rise as global miners produce more during the last quarter of the year,” an unnamed trader in Jinan in China’s eastern Shandong province told Reuters.

Iron ore futures in Dalian have now lost 23.5% from the highs struck in late August, leaving it at the lowest level since July 17.

Rebar futures in Shanghai have also fallen 15.2% from early September, taking the January 2018 contract to lows not seen since August 2.

Base metals were also under pressure, with copper the relative outperformer with a decline of only 1.5%.

The decision from Standard and Poor’s to downgrade China’s sovereign credit rating on Thursday, along with jitters about quantitative tightening from the US Federal Reserve and concerns about Chinese commodity demand, were all cited as factors to explain the ugly sell off.

However, it may just have been driven by speculators rushing for the exits after a solid run higher in recent months.

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