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Kallanish Kallanish

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June, 26th 2019

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JAN 09
13:33

Chinese HRC sentiment improves, rebar flat

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Chinese rebar futures were steady on Wednesday while hot rolled coil gained slightly. Pledges from Beijing to support consumption in key areas was read as positive for manufacturing but support looks set to be targeted whilst being limited, Kallanish notes.

On the Shanghai Futures Exchange the May rebar contract closed at CNY 3,507/tonne ($511/t), CNY 2/t higher than Tuesday, while the same contract for hot rolled coil closed up CNY 18/t at CNY 3,421/t.

Flat product prices have been buoyed by comments from the National Development and Reform Commission. Vice chairman Ning Jizhe said support would be available to support consumption of certain products such as cars and household goods. These products are expected to be a drag on steel demand in 2019 and so it is natural that support would impact steel futures. The comments also make it clear however that Beijing is focussing on key areas of weakness rather than announcing a more widespread stimulus. That may not be such great news for steel demand.

The headwinds faced by the Chinese economy meanwhile were noted by the World Bank this week when it revised downwards its forecast for global economic growth this year. Global growth is now expected at 2.9% instead of 3%, largely because China is now only expected to see 6.2% growth instead of 6.5%.