SHFE rebar futures plunge to record low on Thursday
Rebar futures on the Shanghai Futures Exchange dropped to an historical low on Thursday May 15, following the release of poor power consumption data.
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The most-traded October rebar contract fell to 3,130 yuan ($508) per tonne towards the close of the session, the lowest level since its launch in March 2009.
“The rebar futures contract is a barometer of China’s investment-driven economy,” an industry analyst in Beijing said.
The contract closed at 3,131 yuan ($508) per tonne today, up just $1 from the all-time low and down 35 yuan ($6) per tonne from Wednesday.
“The much lower power consumption growth in April gave the market a blow. And the contract could plunge further if the government refuses to provide incentives,” a trader in Hong Kong told Steel First.
In April, China’s power consumption, an indicator of economic activity, grew 4.6% year-on-year to 435.6 billion kwh. The growth was far below March’s figure of 7.2% and April’s level of 13.7%, according to data released by the National Energy Administration (NEA) on Thursday May 15.
Total power consumption during the first four months reached 1.71 trillion kwh, up 5.25 year-on-year, but power use for the primary industry fell 4.9% on the year to 25.4 billion kwh in the period, NEA said.
By contrast, iron ore futures on the Dalian Commodity Exchange remained stable today, with the most-traded September contract closing at 738 yuan ($120) per tonne, flat with Wednesday.