November 30, 2018 / 2:39 AM / 7 months ago

Shanghai rebar futures set for 5th week of losses on supply glut

* China’s steel prices down almost 15 pct in 5 weeks of slide

* Steel margins still high enough to encourage production

By Naveen Thukral

SINGAPORE, Nov 30 (Reuters) - Chinese steel futures lost more ground on Friday and the market was set for a fifth successive weekly decline with pressure from ample supplies and dismal demand.

Raw material iron ore rose for a third consecutive session but the market was on track for its biggest weekly drop in eight months.

The most-traded January rebar on the Shanghai Futures Exchange was down 0.8 percent at 3,588 yuan ($516.59) a tonne by 0223 GMT. For the week, the market is down almost 3 percent.

“There is no order for the steel mills to cut production, it is flexible which means some might continue to produce,” said analyst Helen Lau of Argonaut Securities.

“Overall, steel margins have declined from peak levels but profits are still high enough for mills to continue producing.”

China has allowed regions to determine production restrictions instead of imposing across-the-board curbs like it did last winter for its anti-smog campaign, keeping steel output high in the world’s top producer while consumption weakens in a cooling economy.

Chinese steel producers ran up losses for the first time in three years this month as prices slid into a bear market on weak demand and near-record supply, ending years of solid profit margins.

Iron ore on the Dalian Commodity Exchange was up 0.8 percent to 478 yuan a tonne. The market has lost nearly six percent this week, marking biggest weekly fall since late March.

Coke gained 0.2 percent to 2,124.5 yuan a tonne and coking coal gave up 0.3 percent to 1,330 yuan a tonne.

$1 = 6.9456 Chinese yuan Reporting by Naveen Thukral; editing by Sai Sachin Ravikumar

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