Steel contracts hit record low in China

Signs of weakness in the world's second largest economy emerged when it was reported that the country's industrial profits had dropped 0.6 percent since July.

Experts believe that if officials in Beijing do not take the necessary measures on this issue, it could lead to more depressing upcoming government news on manufacturing activities and services, and the country could face a sharp decline in industrial growth.

On the Shanghai Stock Exchange, one of the most traded rebar futures for January delivery fell to 2,530 yuan a tonne, a record 2.3 percent drop. On the Dalian Commodity Exchange, iron ore contracts for January fell 2.5 percent to 542 yuan per ton. This month, at the Dalian Exchange, rebar is down nearly 14 percent, while iron ore is down 13 percent.

a Shanghai raider said that "excess iron ore and declining demand remain the main problem causing prices to fall and refunds are not expected to occur anytime soon." Construction orders continue to fall in China, according to Macquarie's steel survey.

Infrastructure demand turned negative. Traders are actively trying to reduce their stock levels. As a result, factories see a decrease in the number of orders. This, in turn, could lead to further production cuts, Macquarie notes.