A sustained decline in inventory of steel products among Chinese traders suggests demand remains firm, said Lau, but may be not as strong as many in the market had initially expected.

Stocks of five major steel products - including construction-used rebar - held by traders stood at about 12.9 million tonnes as of April 21, the lowest since late January, said Lau, citing data from Mysteel consultancy.

While Chinese mills may have not cut production so far, a "further decline in prices would be the catalyst," said Lau.

Coal used in steelmaking also dropped. Coking coal on Dalian fell 4.6 percent to 1,085.50 yuan a tonne and coke slid 4 percent to 1,573.50 yuan.

Further weakness in futures could push down spot iron ore prices again after a three-day rally.

Iron ore for delivery to China's Qingdao port .IO62-CNO=MB climbed 4.4 percent to $68.22 a tonne on Friday, marking its biggest single-day increase since Feb. 13,

 

Source:af.reuters.com

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