Reuters reported that China steel futures rose marginally recently but posted their biggest weekly loss in nearly two months reflecting persistently sluggish demand from the world's top steel market that is expected to keep spot iron ore prices under pressure.

The most-traded rebar contract for January delivery on the Shanghai Futures Exchange closed up 0.6% at CNY 3,941 a tonne after four straight days of losses. On a continuation basis rebar dropped 3.3% for the week, its steepest loss since mid-May.

An iron ore trader in Singapore said "The third quarter will be very poor in terms of demand for steel and iron ore. I don't think we've hit bottom yet. With steel prices continuing to fall and mills' margins getting completely eroded there's nowhere for iron ore prices to go but down."

China biggest listed steelmaker, Baoshan Iron and Steel said on Thursday it will cut August prices of its main products by 4.6% to 5.6%. It marked the second time Baosteel cut prices this year after slashing rates for July, underlining the company lack of confidence that demand will bounce back in the near term.

Adding pressure on steel prices is the continued increase in supply in China as the country legion of mills sustains production at record pace to keep their market share in a highly fragmented sector. China average daily crude steel output hit 2.007 million tonnes in June the second highest on record.

Source - Reuters

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