China's steel futures continuously dropped for the third consecutive time on Tuesday because of the projected slower demand in 2019. It is expected that prices of raw materials in making steel like iron ore, cooking coal, and coke will also drop.
The Metallurgical Planning and Research Institute said that they are expecting that the country's steel consumption will drop in 2019 following its double-digit rise this 2018. The institute's steel demand projection showed that it will decrease by 2.4 percent this year. The consumption is expected to be 88 million tonnes next year which is lower than the 820 million tonne consumption capacity this year.
Baoshan Iron & Steel Co Ltd, a leading steelmaker, announced on Monday that they will implement price cuts on its key products for January delivery as speculations of weaker consumption occurs. There is a decrease in the prices of construction-used rebar on the Shanghai Futures Exchange. The price is down by 1.3 percent at 3,300 yuan per tonne by 0206 GMT.
The price of the Hot rolled coil which is used in manufacturing is down by 1.4 percent to 3,266 yuan. Helen Lau, an Argonaut Securities analyst, said that she expects Chinese steel demand to decelerate because of weaker car sales and the slow growth in the infrastructure business. She added that if steel exports continuous to weaken, it will increase risks of oversupply in the local markets.
According to records, China's steel shipments fell by 9 percent reaching 63.78 million tonnes on the first 11 months of the year. Lau added that the continuous decline in steel exports took place after the yuan depreciated this year. She said that the currency depreciation could not help the country's steel exports.
Steel prices continued to drop amidst the production curbs following the imposed emergency measures to fight smog in the steelmaking city of Tangshan. The second level smog emergency alert announced by the city imposes output cuts on steel mills and other industries for this month.
The prices of high-demand iron ores in the Dalian Commodity Exchange fell by 0.2 percent reaching 471 yuan per tonne while the price of the cooking coal is also down by 0.9 percent to 1,430 yuan.
Coal is at 1,951 yuan per tonne, following a 3.1 percent fall. According to SteelHome Industry, prices of spot iron ore for delivery to China remained at $66.90 per tonne on Monday.
