According an expert, on April 11th that steel capacity would be oversupplied in two years. Under the circumstance that futures prices went up in markets around China, futures contracts of rebar will range from CNY 3350 per tonne to CNY 3550 per tonne.
China has been the largest steel maker since 13 years ago and a net steel exporter since 2006. However, Chinese steel makers mainly produce some low-end steel products. Besides, Chinese steel makers rely heavily on imported raw materials. Amid the global economic woe last year, steel product prices kept falling and touched the bottom.
The expert said that Chinese steel capacity surplus would not ease up in two years. Futures contracts would prevent steel product prices from great fluctuations. An analyst suggest futures contracts be used to hedge out risks.