Reuters reported that Shanghai rebar futures fell again recently hitting the lowest level in over a month, shrugging off gains in other broader markets as worries about the euro zone debt crisis lingered.
Beijing renewed vows to battle stubborn inflation which hovered at 6.3% in August has also dampened earlier hopes that Beijing could gradually ease its iron grip on bank lending later this year and curbing investors'' risk appetite.
Mr Wang Dezhi China Orient Futures analyst said "The overall market remains exposed to many risks in the near term. The ongoing credit tightening has also dealt a blow to the steel trade, since it relies heavily on short term financing."
China has repeatedly raised interest rates and banks'' required reserve ratio among other measures to mop up excessive liquidity.
Premier Mr Wen Jiabao said on Wednesday that China would keep its monetary policy tight and that wrestling inflation remains the top policy priority.
Traders said in a sign that the outlook for the steel sector was growing more uncertain, major steelmaker Anshan Steel said it would keep its hot rolled coil prices unchanged and would raise cold rolled coil prices by CNY 30 per tonne for October.
Industry watchers said the feverish output churned out by Chinese steel mills in recent months was also adding to worries that the supply overhang would worsen and cut into prices.
Mr Henry Liu an analyst with Mirae Asset Securities in Hong Kong said "With increasing capacity and diminishing margins, we doubt whether the steel price increases will continue into winter."
( Source: www.Steelguru.com )