Chinese steel and bulk commodity futures remain under pressure on Thursday, extending the selloff that began earlier in the week.
Here’s the scorecard as at 4pm in Sydney.
SHFE Rebar ¥3,894 , -1.57%
DCE Iron Ore ¥516.50 , -3.37%
DCE Coking Coal ¥1,312.00 , -3.42%
DCE Coke ¥2,077.50 , -4.81%
It’s another seas of red with continued weakness in rebar futures continuing to drag iron ore, coke and coking coal contracts lower as a consequence.
While profit-taking may be behind the move — the May 2018 rebar contract rallied 22% between early October and early December — others believe more fundamental factors may explain the recent bout of weakness.
“Spot steel prices hit a multi-year high (on Tuesday), and traders are clearing their stocks to lock-in profit amid worries that the turning point may come soon as demand will drop off seasonally,” an analyst with a trading firm in Shanghai told Reuters.
“The physical market starts weakening today.”
Reuters says a warmer-than-usual start to winter in China helped to boost demand from the construction sector, tightening spot steel markets leading to recent price gains.
On Wednesday, the price for benchmark 62% iron ore fines tumbled 3.4% to $69.36 a tonne, according to Metal Bulletin, its largest one-day percentage decline since September 22.
It was also the first time since mid-November that back-to-back declines have been reported.