Chinese stainless steel futures fell for a second straight session on Tuesday, following a big drop in the prices of its raw material nickel, while poor downstream consumption due to the COVID-19 situation also dented sentiment.
The most-active stainless steel contract on Shanghai Futures Exchange SHSScv1, for June delivery, slipped 1.4% to 19,225 yuan ($2,936.28) a tonne, its lowest close since March 4. Earlier in the session, the contract dropped as much as 4% to 18,720 yuan.
The current stainless steel market can be described as “high cost, low profit, strong supply, and weak demand”, Huatai Futures analysts wrote in a note, adding that consumption was sluggish due to the COVID-19 outbreak.
Shanghai nickel futures SNIcv1 slid as much as 6.8% to 205,880 yuan a tonne, further weighing on stainless steel prices.
Other steel products on the Shanghai bourse also extended falls, with construction material rebar SRBcv1, for October delivery, ending down 0.7% to 4,829 yuan a tonne. Hot-rolled coils SHHCcv1, used in the manufacturing sector, fell 1.2% to 4,907 yuan per tonne.
Chinese Premier Li Keqiang told a State Council meeting on Monday that the country should watch the economic impact from domestic and external factors that have exceeded expectations, and policy measures need to be implemented in the first half to stabilise prices and economic fundamentals.
Benchmark iron ore futures on the Dalian Commodity Exchange DCIOcv1, for September delivery, declined 2.5% to 809 yuan a tonne, extending losses to the third session.
Spot prices of iron ore with 62% iron content for delivery to China SH-CCN-IRNOR62, compiled by SteelHome consultancy, fell for a fourth consecutive session and stood at $139 a tonne on Monday, the lowest since end-February.
Coking coal prices DJMcv1 inched 0.2% lower to 2,911 yuan a tonne, and coke futures DCJcv1 fell 2.2% to 3,634 yuan per tonne.
Source: Reuters (Reporting by Min Zhang in Beijing and Enrico Dela Cruz in Manila; editing by Uttaresh.V and Subhranshu Sahu)
