China steel prices are languishing at record lows as persistent concerns over the health of the world's second largest economy bite amid severe overcapacity.
Benchmark steel rebar prices on the Shanghai Futures Exchange hit a record low of 1,733 Chinese yuan (around $272) on Wednesday, down more than a third year-to-date.
With China producing 800 million tons of steel a year—four times more than any other country has ever produced—the sector is in severe overcapacity of some 400 million tons as construction slows in the world's second largest economy.
"A lot of that growth is completely artificially, supported by government policies and subsidies so it's natural to see that sector shrink," Intelligent Investor analyst Gaurav Sodhi told CNBC's Street Signs.
According to the China Iron and Steel Association, apparent steel consumption in China, the world's biggest producer and consumer, fell 5.7 percent to 591 million tons in the first 10 months of the year.
The slump in steel prices is also hitting the price of raw material iron ore. Iron ore for delivery into Qingdao is trading around $45 a ton, near an all-time low of $44.10 reach in August.