Shanghai stainless steel extends losses as raw material prices fall

Chinese stainless steel futures fell for a second straight session on Tuesday, following a big drop in the prices of its raw material nickel, while poor downstream consumption due to the Covid-19 situation also dented sentiment.

The most-active stainless steel contract on Shanghai Futures Exchange, for June delivery, slipped 1.4 per cent to 19,225 yuan (S$4,030) a tonne, its lowest close since March 4. Earlier in the session, the contract dropped as much as 4 per cent to 18,720 yuan.

The current stainless steel market can be described as “high cost, low profit, strong supply, and weak demand”, Huatai Futures analysts wrote in a note, adding that consumption was sluggish due to the Covid-19 outbreak.

Shanghai nickel futures slid as much as 6.8 per cent to 205,880 yuan a tonne, further weighing on stainless steel prices.

Other steel products on the Shanghai bourse also extended falls, with construction material rebar, for October delivery, ending down 0.7 per cent to 4,829 yuan a tonne. Hot-rolled coils, used in the manufacturing sector, fell 1.2 per cent to 4,907 yuan per tonne.

Chinese Premier Li Keqiang told a State Council meeting on Monday that the country should watch the economic impact from domestic and external factors that have exceeded expectations, and policy measures need to be implemented in the first half to stabilise prices and economic fundamentals.

Benchmark iron ore futures on the Dalian Commodity Exchange , for September delivery, declined 2.5 per cent to 809 yuan a tonne, extending losses to the third session.

Spot prices of iron ore with 62 per cent iron content for delivery to China , compiled by SteelHome consultancy, fell for a fourth consecutive session and stood at US$139 a tonne on Monday, the lowest since end-February.

Coking coal prices inched 0.2 per cent lower to 2,911 yuan a tonne, and coke futures fell 2.2 per cent to 3,634 yuan per tonne. REUTERS