Shanghai steel prices fell on Friday, posting their biggest weekly loss since March, with risk appetite curbed by signs that a tariff war between China and the United States is hitting global companies.
Luxury carmaker Daimler cut its profit forecast and BMW said it was looking at “strategic options” because of the rising trade tensions between Beijing and Washington.
The German companies joined American farmers and Chinese solar panel and steel makers among the first casualties in what looks set to become a bitter trade war on a global scale of a kind not seen since the 1930s.
U.S. President Donald Trump’s planned implementation on July 6 of tariffs on $50 billion of imports from China “could spark a global market meltdown,” said Michael McCarthy, chief market strategist at CMC Markets and Stockbroking.
“While hope remains that the moves announced from Washington and Beijing are negotiating positions rather than concrete intentions, risks are high. Any escalation, or even a lack of news, could see further reduction in risk appetites,” McCarthy wrote in a report.
The most-active October rebar contract on the Shanghai Futures Exchange closed down 1.3 percent at 3,760 yuan ($579) a tonne. Hot rolled coil (HRC) futures slipped 0.7 percent to 3,870 yuan.
Rebar, used in construction, has lost 3.1 percent this week and HRC, used in manufacturing, has fallen 2.4 percent, the most for these contracts since late March.
The price declines came even as Chinese steel demand remained mostly firm, as evidenced by a sustained drop in stockpiles.
Rebar inventories at Chinese traders stood at 4.77 million tonnes on June 15, down 51 percent from mid-March, data tracked by SteelHome consultancy showed.
Stocks of HRC have fallen 37 percent to 1.98 million tonnes during the same period, SteelHome data showed.
Among steelmaking raw materials, coking coal on the Dalian Commodity Exchange was the hardest hit, sliding 2 percent to settle at 1,184 yuan per tonne, after earlier hitting a 3-1/2 week low of 1,166 yuan. The contract fell 5.7 percent this week, its biggest such loss since January.
Coke dropped 1.4 percent to 2,111 yuan and iron ore gained 0.4 percent to 457.50 yuan.
China’s demand for coking coal and coke is expected to fall due to Beijing’s escalated anti-pollution campaign and ongoing industrial adjustment, Cui Pijiang, president of China Coking Industry Association, said on Thursday.
Spot iron ore for delivery to China’s Qingdao port dropped 0.9 percent to $64.88 a tonne on Thursday, the lowest since May 28, according to Metal Bulletin.
The spot benchmark has fallen more than 5 percent this week, the most since late March.
Source: ReutersPrevious Next