China's steelmakers cut product prices

Major Chinese manufacturers, including Shagang, have announced rebar and wire price cuts of 100 yuan ($ 16) per tonne starting in October following recent declines in raw material prices.

The sharp drop in Chinese domestic steel prices as well as iron ore prices continued throughout September, suggesting that this was the worst month for the Chinese steel sector. In addition, the likelihood is high that this trend will continue in the next month.

In Beijing, the market price for 20mm rebar closed at CNY 2,570 /t, down CNY 390 /t, about 13 percent MoM. The most traded futures contracts of SHFE RB-1410 rebar dipped below 2500 marks to CNY 2452, the level of losses was CNY 70 per day, and compared to the previous month CNY 404 or 14 percent. (CNY 6.15 = 1 USD)

This clearly reflects that steel market participants do not see the possibility of a price rebound and shy away from buying. Much of the pressure on steel prices will be exacerbated by low iron ore prices, which have long been under pressure from oversupply. Iron ore prices of various grades and origins of CFR China declined 11 to 13 percent in September. In addition, the price of ore for immediate delivery to China fell 1.2 percent on Monday to $ 77.70 per tonne, the lowest level since September 2009.