Rebar futures hit 9-month lows

Rebar futures hit 9-month lows The steel industry, often described as "cold," didn't warm up even in the summer heat. Last week, the main rebar contract plummeted by 4.34%, reaching a nine-month low of 9,116 yuan per ton—down from a high of 34,160 yuan per ton earlier this year. Open interest surged to a record high of 2.477 million contracts, signaling increased speculation and concern among traders. On June 3, Rb1310 closed at 4,483 yuan per ton, marking a slight rise of 1.52% for the day. The downward trend in rebar prices began after the Spring Festival this year, with the price dropping from a peak of 4,300 yuan per ton to 3,400 yuan per ton—a decline of 20.93%. This sharp fall has had a ripple effect on related markets, particularly imported iron ore. On May 30, the Platts index fell to $111.5 per ton, hitting a new annual low. However, the China Steel Association reported that mid-May crude steel production reached an estimated 2,185,400 tons, still relatively high. This level of output is seen as a supporting factor for iron ore prices, despite the overall bearish sentiment. Spot rebar transactions remain sluggish, with prices continuing to decline. In Beijing, the price of third-grade rebar dropped by 50 yuan per ton compared to the previous week, while in Shanghai, rebar prices fell by 130 yuan per ton. Analyst Jiang Hang from Nanhua noted that the impact of early steel trade loans has led to lower inventory levels among traders. As a result, purchasing enthusiasm remains weak, putting additional pressure on steel mills to push out goods. According to data from the China Iron and Steel Association, social inventories of the five major steel products in 22 cities decreased in May 2013, with notable declines in wire and rebar stocks. Galaxy analyst Zhang Yuan believes that rising corporate labor and environmental protection costs, combined with declining spot market activity, suggest that the steel industry may continue to operate near the brink of losses in the coming months. "In recent days, the announcement of renewed land price increases in first-tier cities may lead to the launch of real estate tax pilots," Zhang Yuan said. "This will further add long-term pressure on the steel sector." He also pointed out that with no clear signs of macroeconomic improvement and raw material prices remaining volatile, the traditional steel demand season is winding down. As a result, rebar prices are likely to continue their downward trend in the short term.

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