Chinese rebar and steel futures prices on Monday were hit by a joint meeting held by five national departments last Sunday. The meeting mentioned the upcoming regulation of spot and futures markets and sent sentiment spiralling downwards, Kallanish notes.
On the Shanghai Futures Exchange the October rebar contract closed CNY 138/tonne lower than the previous Friday at CNY 4,974/t ($773/t), while the same contract for HRC closed down CNY 177/t at CNY 5,316/t.
The Sunday meeting was composed of the National Development and Reform Commission, Ministry of Industry and Information Technology, State-owned Assets Supervision and Administration Commission, State Administration for Market Regulation, and Securities Regulatory Commission. In addition to mentioning regulation, they talked with some powerful steelmakers and industry associations and issued requirements related to actions that could support higher prices.
The meeting stated that excessive speculation in the market had disrupted normal production and sales, and pushed up prices. Although China has yet to detail actions it will take to control inflation, speculators are fleeing commodity futures in expectation of a crackdown.
By Kallanish Team