Chinese steel futures prices were weak on Friday, while physical spot market prices were down slightly from the week before. Data showing a decline in steel output in late October is a start but remains far too little to balance the weak market, Kallanish notes.

The May 2016 rebar contract on the Shanghai Futures Exchange closed down CY 8/tonne at CNY 1,759/t ($276/t), while the January contract for hot rolled coil on the same exchange closed flat at CNY 1,770/t.

Spot market steel prices also remained subdued on Friday. 20mm HRB400 rebar prices in Shanghai were down CNY 25/t over the week to CNY 1,880-1,930/t, while 5.5mm Q235B prices were down just CNY 10/t to CNY 1,830-1,870/t.

China’s major mills produced crude steel at a rate of around 1.65 million tonnes/day over the last 11 days of October, down -2.92% from mid-October, according to the China Iron and Steel Association (CISA). The production remains too high considering that demand from construction remains weak and export volumes also slowed last month.

CISA claims mill finished steel inventories were down -9.38% over the eleven days to 14.81mt, but the volatility of that figure only highlights doubts about how representative it truly is. Perhaps more likely is the change in inventory from the end of September, up 0.07%.