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Chinese steel futures slide on oversupply concerns
[BEIJING] Chinese steel futures edged down on Friday on worries about oversupply amid an increase in utilisation rates at mills, but they remained on track for a weekly gain.
Steelmakers in China have been ramping up output to cash in on firm profit-margins despite heightened environmental measures in major steel-producing hubs.
Utilisation rates at steel mills have risen 2.07 percentage points in the week to May 24 from 71.13 per cent the week before, data compiled by Mysteel consultancy showed. Those were the highest levels since mid-July.
"With rising steel production, traders started to speed up destocking amid concerns over a glut and waning demand," analysts from Jinrui Futures said in a note.
Benchmark construction steel rebar prices had dipped 0.7 per cent to 3,873 yuan (S$772.94) a tonne by 0209 GMT.
Hot-rolled coil futures fell 1 per cent to 3,699 yuan.
The inventory of steel products at Chinese traders continued to decrease this week, declining by 514,800 tonnes to 11.62 million tonnes, Mysteel data showed.
Steel demand typically weakens during summer in China as high temperatures and rain hamper construction activity.
Dalian iron ore eased on Friday after surging to a record-high in the previous session, with the bourse warning investors to trade "rationally".
The most-traded iron ore contract, for September delivery, slid 0.3 per cent to 727 yuan a tonne.
Coking coal and coke rose after a brief price correction on Thursday. They were up 1.3 per cent and 2.1 per cent respectively.
"(We expect coking coal) prices will remain elevated, with strong demand from China's steel sector as US-China relations deteriorate and the probability of further economic support from the government to the slowing Chinese economy rises," said analysts at Fitch Solutions Macro Research.