Chinese steel and iron ore futures post worst monthly performance on record
Chinese steel and iron ore futures clocked their worst monthly slump on record, amid a deepening crisis in the global steel industry.
Rebar, or reinforcing steel, clocked a 23 per cent monthly decline, its worst on record since launching in 2009. The most-traded rebar on the Shanghai futures exchange closed down 0.8 per cent at 1,978 yuan (£205) per tonne.
On the Dalian Commodity Exchange, the most-active iron ore gained 0.3 per cent to 344 yuan a tonne. But it still fell 25 per cent in May, its biggest monthly decline since launching in 2013.
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It ends a September to April rally driven by optimism about China's economy. This turned sour as indicators — from retail sales to trade — suggested a recovery in the world's second largest economy wasn't yet in place and oversupply concerns weighed.
The rally had helped shuttered Chinese steel mills spring back to life, increasing supply that could keep steel markets under pressure as seasonal demand slows down with hot weather curbing construction activity for June.
The mills "just don't start and stop with the flows of seasonal demand," said Daniel Hynes, senior commodity strategist at ANZ Bank.
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"We'd expect those to remain open for the time being and that probably should result in steel production holding up relatively well despite that normal seasonal slowdown," he added.
It comes during a deepening crisis in the global steel industry due to so-called dumping by China in other markets such as Europe and the US, consequent low prices and high energy costs for producers.
This has resulted in Tata Steel's decision to sell its UK business, putting around 14,000 jobs at risk. Reports have since suggested Tata could retain its British operation with financial support from the government.