China's steel prices tumble on slower growth in demand

China’s steel prices tumbled last week as demand growth failed to meet expectations, analysts said.

Over the past week Lange Steel Information Center's steel price index fell 2.39 percent while that at Mysteel shed 3.03 percent. 

Prices fell bigger than 100 yuan (US$19) per ton for most of the steel products, led by rebar which plunged over 200 yuan per ton nationwide to around 3,663 yuan per ton, the lowest since January, Lange said in a report today.

While prices rallied for a week after the Lunar New Year festival as investors anticipated demand would surge after domestic industrial companies resumed production, the drop has actually “totally offset” the rebound as “demand didn’t recover so fast,” said Fang Shi, analyst at Lange.

Wang Guoqing, Lange’s research director, blamed the "slower demand growth for steel" to construction nationwide starting later due to a shortage of funds among local governments.

Lange said domestic steel inventories have climbed for 12 weeks, especially stocks of building steel which totaled around 13.2 million tons nationwide by last Friday, up 41.05 percent higher from a year ago.

The price drop in the spot market occurred after the futures market plunged, with the most traded rebar contract for May delivery shedding 6.81 percent last week to 3,709 yuan per ton after four straight days of decline.