Nearing a bear market, China steel sector weighs record output, softer economy: Russell

China’s steel sector is toying with falling into a bear market, with prices almost down 20 percent in the past three months as the industry’s run of record production meets the reality of a slowing economy and trade disputes.

Shanghai steel rebar futures, the benchmark price, fell 18.8 percent from the highest so far this year at 4,418 yuan ($637.52) a ton on Aug. 22 to a low of 3,586 yuan on Wednesday.

It’s worth noting that steel futures still remain higher than at the end of last year, when they closed at 3,431 yuan a ton, although the recent declines have come close to wiping out the gains for the year.

Sentiment appears to have swung in the industry, which had been buoyed in the middle two quarters of 2018 by strong profitability amid the ongoing closure of older and less efficient steel mills.

China has been chalking up record after record monthly steel production this year, with output reaching new highs in every month since April, with the exception of August.

Output hit 82.55 million tonnes in October, up from 80.85 million in September, according to official statistics released on Nov. 14.

Output over the first 10 months of the year was 782.46 million tonnes, up 6.4 percent on the same period last year, according to the market.

 

/reuters.com

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