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Shanghai rebar extends losses on tepid spot trade, high supply

China’s construction steel rebar futures fell for a fourth straight day on Wednesday, pressured by lukewarm trading in spot market amid an increase in supplies.

Shanghai benchmark rebar contracts was down 1.3 percent at 3,604 yuan ($565.65) a tonne, as of 0230 GMT. Earlier in the session, the rebar contracts dropped 1.8 percent to touch their lowest in nearly two weeks.

Prices of spot steel products dropped 0.1 percent to 4309.35 yuan a tonne on Tuesday, slipping for a third consecutive trading session since Thursday, while benchmark Tangshan billet prices slipped 10 yuan to 3,590 yuan, data from Mysteel consultancy showed.

Crude steel production by leading steel companies between April 10 and April 20 rose 1.87 percent compared with a month ago, with daily output reaching 1.91 million tonnes, data from China’s Iron & Steel Association showed, the highest since at least 2009, indicating mills are ramping up output after environmental curbs were eased in March.

Soft steel trade also weighed on the raw materials’ market. The most-traded coke contracts on the Dalian Commodity Exchange tumbled after hitting a two-month peak in the previous session. It dived as much as 2.7 percent to 1,973 yuan a tonne, marking its biggest intraday fall since April 12.

Coke prices lost 1.9 percent to 1,989.5 yuan a tonne.

The most-active iron ore futures for September delivery eked out gains during early trade, but remained under pressure of high inventories at ports. It edged up 0.5 percent to 475.5 yuan a tonne.

“Traders are very cautious at this moment given the mounting stockpiles and weak prices,” said a Shanghai-based iron ore trader.

China’s customs data showed the country bought 82.92 million tonnes of iron ore in April, nearly flat from a year ago but ebbed 3.3 percent from March, suggesting environmental curbs at steel mills may have weighed on demand for raw materials.

However, supplies would not necessarily be loose even if inventories almost reached a record level, the trader said.

“People are reluctant to sell at this point as they are waiting for a higher bid.”

Source: Reuters

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