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SHANGHAI, Oct 13 (Reuters) – Chinese futures prices of energy, petrochemical and ferrous metals contracts fell on Wednesday amid dips in global oil prices, production controls as well as concerns of slowing demand due to rising input costs including power.
Crude oil futures on the Shanghai International Energy Exchange were last down 1.4%, while fuel oil futures eased 1.9%. Ethylene glycol futures , which earlier hit record highs on production curbs, slid 8% in Wednesday’s afternoon trade.
China has been grappling with a growing energy crisis brought on by shortages and record high prices of coal. It has taken various steps to boost coal production and manage electricity demand at industrial plants, while power producers and other coal users have been ramping up imports. read more
On Tuesday, the government announced it would allow coal-fired power plants to pass on the high costs of generation to some end-users via market-driven electricity prices, stoking fears of inflationary pressures. read more
“Demand can’t keep up when upstream costs are too high,” said a Shanghai-based energy products trader. “Also, a price correction in this case after such price rallies is normal.”
Meanwhile, the most traded iron ore contract tumbled 5.9% and rebar futures fell 4.7% to an over one-month low due to a bearish demand outlook.
Demand for iron ore in China, the world’s biggest steel producer, had already waned earlier on the back of steel production controls. China had pledged to curb expansions of high-polluting and high-energy intensity sectors, including steel, to reach its climate targets.
Steel mills in more northern cities were also asked to cut production from Nov. 15 to March 15 next year to meet steel output reduction targets, according to China’s industry and environment ministries on Wednesday.
Reporting by Emily Chow; Editing by Krishna Chandra Eluri
Our Standards: The Thomson Reuters Trust Principles.
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