China steel futures drop by 6pc on output concerns

Chinese ferrous futures fell on Monday, with steel rebar and hot rolled coils both plunging some 6 percent, after Beijing updated its stance on carbon reduction work, raising worries of an adjustment in output cuts, Reuters reports.

A Politburo meeting chaired by President Xi Jinping on Friday said China should avoid "campaign-style" carbon reduction efforts.

While there were some places blindly launched projects with high emissions and energy consumption, there were others that "over-reacted" and made emission-cut plans too early, state media Xinhua said in a commentary, adding that such an attempt could affect normal economic development.

"The requirement (by Politburo) could revise the crude steel output cut task, and possibly have a strong impact on steel prices in the short term," analysts with Haitong Futures said in a note.

Both steel rebar and hot rolled coils are set to post their biggest percentage loss in ten weeks.

The most-traded construction rebar on the Shanghai Futures Exchange, for October delivery, slumped by 6.4 percent at 5,367 yuan (US$829.89) per ton. They were down by 5. percent%, as of 0208 GMT.

Hot rolled coils on the Shanghai bourse, used in cars and home appliances, dropped by 5.7 percent at 55,780 yuan a ton, after falling by 6.5 percent earlier.

Stainless steel futures, for September delivery, fell by 2.9 percent at 19,315 yuan per ton.

Raw material prices on the Dalian Commodity Exchange also declined. Benchmark iron ore futures extended losses into a fifth straight session, down 1.9 percent at 1,043 yuan a ton.

Spot prices of iron ore, with 62 percent iron content for delivery to China, dropped US$12.5 to US$185 a ton on Friday, the lowest since May 26, according to SteelHome consultancy.

Dalian coking coal futures faltered by 1.7 percent at 2,254 yuan a ton and coke slipped by 1.8 percent to 2,876 yuan per ton.