Dalian iron ore falls as buying by Chinese steel mills weakens
18 August 2015
Chinese iron ore futures fell on Monday as buying from the world's top consumer slowed after mills slowed down replenishment of the raw material.
Persistent weakness in China's steel demand has dampened gains made in prices of steel and the steelmaking ingredient over the past month as an economic slowdown in the world's top producer of the metal deepens.
The most traded January iron ore contract on the Dalian Commodity Exchange dropped 1 percent to 381 yuan ($59.60) a tonne by the close.
"Steel mills have finished restocking inventories and they are still keeping it at relatively low levels," said an iron ore buying official with a northern China steel mill.
Iron ore prices gained almost 4 percent last week, the third weekly gain in a row, as steel mills stepped up purchases. Two massive blasts at Tianjin Port that disrupted deliveries also gave the market a temporary lift.
"However, the underlying weak steel demand suggests that the price rally is overdone," ANZ said in a research note.
"A slowdown in Chinese domestic steel demand has triggered a strong wave of steel exports," it also said.
Chinese steel exports were 9.73 million tonnes in July, near a record 10.29 million tonnes hit in January. Shipments reached 62.13 million tonnes over January-July, already two-thirds of the record 93.78 million tonnes shipped in all of 2014.
Shanghai rebar futures on the Shanghai Futures Exchange extended losses, down 1.3 percent to close at 2,059 yuan a tonne.
Iron ore for immediate delivery to the Tianjin port was flat at $56.20 a tonne on Friday, according to The Steel Index. The spot benchmark hit a one-month high of $56.40 on Aug.5.
Rebar and iron ore prices at 0719 GMT
Contract Last Change Pct Change
SHFE REBAR JAN6 2059 -26.00 -1.25
DALIAN IRON ORE DCE DCIO JAN6 381 -4.00 -1.04
SGX IRON ORE FUTURES SEP 52.32 -0.68 -1.28
THE STEEL INDEX 62 PCT INDEX 56.2 +0.00 +0.00
METAL BULLETIN INDEX 56.74 -0.28 -0.49
Dalian iron ore and Shanghai rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
reuters.com
