Reuters reported that China steel futures dropped for a fourth day running on Thursday as an industry group warned excess supply in the world's top steel market could limit any chance of a recovery in prices.

The most-traded rebar for January delivery on the Shanghai Futures Exchange closed 0.3% lower at CNY 3,659 a tonne. The contract hit a record low of CNY 3,631 this month.

The China Iron and Steel Association said that “China's steel prices are expected to remain weak in the next few months due to a supply glut that will offset an expected increase in demand.”

An iron ore trader in Shanghai said “I don't think there will be any recovery in steel demand for the rest of this year. The economy is so poor and steel production remains high. What would be a game changer, however, is if China's steel production drops by at least 10% or the government invests massively in infrastructure or housing.”

Steel producers in China are wary about cutting production
too much for fear of losing their market share in a highly fragmented industry. Also, with the bulk of China's major steel mills owned by the state, most steelmakers keep their furnaces running to maintain employment.

Source - Reuters

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