Chinese steel futures fell to a 7-week low on Monday amid few signs of a pick-up in demand in the world’s top producer and consumer despite expected seasonal strength, while worries over a possible US rate hike dampened commodities more broadly.
The most active rebar futures contract on the Shanghai Futures Exchange dropped more than 2 percent to 2,276 yuan a tonne by 0300 GMT, its lowest since July 26. It traded 1.9 percent lower at 2,281 yuan ($341.52) by the midday break.
Steel demand traditionally picks up in September after the summer slowdown, but actual demand has failed to show a recovery since August amid a cooling economy and the suspension of some construction activity for the G20 summit.
“Real demand in August was not as good as July and the G20 summit in Hangzhou hit consumption, so let’s see if demand will grow in September,” said Li Wenjing, an analyst with Industrial Futures in Shanghai.
On the Dalian Commodity Exchange, the benchmark iron ore futures contract fell 1.7 percent to 399 yuan a tonne by the midday break. It earlier hit a session low of 396.5 yuan a tonne, the lowest since July 27.
Iron ore port inventories fell 2 percent to 103.75 million tonnes by last Friday, but remain at high levels, sticking above 100 million tonnes since July, industry website umetal.com showed.
Chinese commodities fell across the board amid expectations that US could consider a rate rise later this month. US Federal Reserve official are divided on whether a rate rise is in the offing, with some of the permanent voting members appearing wary of supporting an immediate hike.
($1 = 6.6790 Chinese yuan renminbi)