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Steel prices reduce on over production and inventory in China

Chinese steel futures continued their decline on Monday, with buyers concerned by persistent overcapacity problems, especially after a weaker-than-expected performance by China's manufacturing sector in August.

Economic data issued on Monday suggested that China's stimulus measures were no longer enough to offset declining investment in the property sector, which is suffering from overcapacity.

China's factory sector growth fell to a three-month low in August. China's official manufacturing purchasing manager's index (PMI) also dipped over the month.

The most traded rebar contract on the Shanghai Futures Exchange ended the morning at CNY 2,910 (USD 473) per tonne

At the same time, steel production has remained close to an all-time high, with many struggling mills worried that any decision to cut output would reduce their cashflow and put them at further risk of closure.

The latest CISA figures showed that product inventories at steel mills reached 15.25 million tonnes in mid-August, up 4.68 percent from the first 10 days of the month.


Class
31-Aug
02-Sep
Change
CLPPI
5396
5359
-37
CLPPI
5209
5194
-15
CHISPI
5290
5265
-25

CLPPI – Chinese Long Product Price Index
CFPPI – Chinese Flat Product Price Index
CHISPI – Chinese Steel Price Index
Base of 10000 as on July 1st 2008

Source – Strategic Research Institute – Steel Guru