China is the world's largest user of steel, but sluggish demand from the country's construction industry caused steel prices to drop to a level below those of the previous three months. Rebar on the Shanghai Futures Exchange (SHFE) dropped to 3,471 yuan per metric tonne, the lowest price since April 8, by as much as 1.1%. At 3,478 yuan, the contract finished 0.9% down. According to recent statistics from China, the country's domestic demand is still recovering slowly, and data on building projects shows a double-digit percentage decline in the first five months of the year. The price of SHFE hot-rolled coil steel fell to 3,680 yuan per tonne, a level not seen since April 8. It closed at 3,681 yuan, down 0.7%. Steel shed 0.8% of SHFE wire rod. By 0700 GMT, the benchmark August iron ore contract on the Singapore Exchange had lost 3.4% to $107.70 a tonne, while the most traded September iron ore on China's Dalian Commodity Exchange (DCE) had fallen 1.8% to 813 yuan a tonne. Coke decreased 1.1% to 2,215 yuan, and DCE coking coal fell 2% to 1,531 yuan per tonne. Still, the price drop appears to be restricted. "The demand hasn't fully vanished, despite its weakness. Thus, any price decline won't be unduly significant, especially because much of the pessimism has already been priced, a trader stated.According to the trader, the supporting levels for the contracts for hot-rolled coil and SHFE rebar are 3,600 and 3,360 yuan, respectively. Market participants have been eyeing China's key political meeting next week as they hope for supportive policies to boost demand for steel. "There might be some talks of boosting the economy, etc., but I think what the market is looking for are details," said the trader.
