Falling House Prices in Shenzhen Don't Bode Well for Steel

(Bloomberg) -- Signs curbs on China’s property market are starting to bite may be a red flag for the country’s resilient steel sector.

The number of Chinese cities that saw gains in new-home prices last month contracted, data Friday showed, joining with last week’s weaker construction and home sales figures to paint a picture of a market in retreat. Prices in the southern tech hub Shenzhen fell 0.2 percent with those in Tianjin, while third-tier cities saw the steepest declines as restrictions on house purchases spread across the country.

Steel demand is heavily reliant on a lively property sector, with Shanghai-listed futures on reinforced steel, or rebar, beginning their current bull run after China’s real estate market bottomed out in late-2015.

For now, though, the market is sanguine. Rebar snapped a three-day drop on Thursday and is rallying to end the week.

With assistance from Martin Ritchie

Bloomberg
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