BEIJING: China’s construction steel rebar prices fell for a fourth straight day on Thursday to touch their lowest in three weeks, as investors fretted about slowing manufacturing growth despite promises from top decision makers to support the economy.
The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI), a private survey, showed that China’s manufacturing sector barely grew in October after stalling in September, with the reading edging up to 50.1 from 50.0.
That is in line with an official PMI survey released on Wednesday.
With mounting economic downstream pressure, the politburo, the top decision-making body of the ruling Communist Party, said on Wednesday it will take more timely steps to support the economy, reaffirming a pro-active fiscal policy and prudent monetary policy.
“The politburo’s promises will help buoy market expectation in the long term, but we still need to assess the implementation of actual policies,” CITIC Futures analysts said in a note in Mandarin.
The environment ministry also reiterated on Wednesday that China will not relent in its efforts to fight against toxic air pollution even as the economy slows, although it also admitted that the battle is becoming increasingly difficult.
Benchmark Shanghai rebar prices ended down 1.9 percent at 4,057 yuan ($583.50) a tonne after diving as deep as 2.6 percent, their biggest loss since Sept. 28.
However, average profit margins at steel mills remain above 1,000 yuan a tonne, according to Huatai Futures.
The China Iron and Steel Association said that profits in the steel sector surged 86 percent from January to September this year, while the overall debt-to-asset ratio of its member companies reached 66.11 percent by end-September, down 3.91 percentage points from a year earlier.
Meanwhile, the country’s biggest steelmaking province, Hebei, has issued a second-level smog alert across 10 major cities, forcing industrial plants to halve their production or even shut down during the alert.
The emergency measures will be in place from Oct. 31 to Nov. 5, according to a statement from the provincial government.
Dalian iron ore fell 2.5 percent to 519.5 yuan a tonne when the market closed at 0700 GMT. It gained 8.1 percent last month, its best since November 2017.
The most-traded coking coal futures on the Dalian Commodity Exchange were little changed at 1,385 yuan a tonne, while coke prices dipped 1.7 percent to 2,343.5 yuan a tonne.
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Source: Brecorder
