[BEIJING] Chinese steel rebar futures fell to a fresh record low in the final morning session before the National Day holiday, with few anticipating any big upturn in demand over the rest of the year, especially as export volumes decline.
China's slowing economy has aggravated long-standing overcapacity problems in its steel sector, by far the world's biggest, sending prices to their lowest level in more than two decades.
"It is clear the market is getting worse," said an iron ore trader based in Tangshan, China's biggest steel-producing city.
Chinese steel exports have risen 26.5 per cent in the first eight months of the year, helping mask the decline in domestic consumption, but that lifeline was now also under threat.
"Steel exports are already in decline in the second half, partly because of weak demand, but also because prices overseas are already lower than costs," the trader said.
In the Wednesday morning session, the most-traded rebar contract on the Shanghai Futures Exchange fell 1 percent to 1,820 yuan (S$408.1) a tonne, its lowest since its launch in 2009.
The most active iron ore futures on the Dalian Commodity Exchange ended the morning at 367 yuan a tonne, edging up 0.4 per cent. Meanwhile, spot prices continue to decline.
Iron ore for immediate delivery to China's Tianjin port dropped 2.3 per cent to US$54.7 a tonne on Tuesday, hurt by declining Chinese steel prices and rising supplies.
In its quarterly commodities update, Australia's Department of Industry cut its 2015 iron ore price forecast to US$52.9 from US$55.4 previously, blaming rising seaborne supplies.
Iron ore inventories at 44 Chinese ports reached 82.4 million tonnes by the end of last week, up 2.3 per cent on the week, and the Shanghai-based consultancy SteelHome has forecast further increases in the coming weeks.
According to Mysteel, spot hot-rolled coil prices in Shanghai stood at 1,900 yuan per tonne on Tuesday, closing on a record low of 1,890 yuan set in early July. Prices have fallen 37.5 per cent since the beginning of the year.