Steel rebar and hot-rolled coils (HRC) futures on the Shanghai Futures Exchange fell as rising steel production and lean demand from downstream users have raised worries about oversupply during the off-peak season.
The most traded construction steel rebar, for October delivery, was down 0.06% at 3,612 yuan ($511.08) per tonne, as of 0330 GMT.
Hot-rolled coils, mainly used in the manufacturing sector, fell 0.4% to 3,601 yuan a tonne.
Data compiled by consultancy Mysteel showed that weekly output of five main steel products, including rebar and HRC, continued to rise to 10.94 million tonnes, as of June 18, lifting concerns on increasing supply-and-demand contradiction amid softening demand.
“Current steel profit margins for long-processed steel making is at around 300-400 yuan per tonne, under which the supply is hard to drop dramatically,” Huatai Futures wrote in a note, adding that demand faces further downward risks due to weak construction activities.
Stainless steel futures on the Shanghai bourse, for August delivery, dropped 1% to 13,075 yuan a tonne.