Chinese iron ore futures hit new contract low as rout extends
10 April 2015
Chinese iron ore futures tumbled nearly 4 percent to touch a new record low on Friday and posted a fourth straight weekly loss, due to weak buying interest in the world's top consumer amid bearish market sentiment.
Steel mills in China, the world's largest producer, have only purchased the raw material at a minimum on expectations of further declines in prices driven down by subdued steel demand in the country and an expanding supply glut.
"The overall market is bearish and mills are only buying on a hand-to-mouth basis," said Li Wenjing, an analyst at Industrial Futures in Shanghai.
The most-active iron ore futures for September delivery on the Dalian Commodity Exchange hit a session low of 368 yuan ($59), its weakest since the launch of the contract in October 2013. It closed 3.1 percent lower at 370 yuan, and 1.3 percent for the week, posting the fourth consecutive weekly losses.
Average daily output from China's large steelmakers dropped 2.2 percent for March 21-31 from the preceding 10 days, down for the third consecutive period, industry data showed on Thursday. [STEE/CN]
The production cutbacks will add pressure on iron ore.
China's consumer inflation stayed flat at 1.4 percent in March, while producer prices fell slightly less than projected, official data showed on Friday, keeping pressure on profit margins at Chinese companies as Beijing struggles to stimulate growth.
The most-traded October rebar contract on the Shanghai Futures Exchange dropped for the 8th straight session, and closed 1.6 percent down at 2,266 yuan, the lowest since the bourse started trading the contract in 2009.
For the week, the price was down 3.1 percent, posting the seventh straight weekly loss.
Benchmark 62 percent grade iron ore for immediate delivery to China fell 0.2 percent at $47.80 a ton on Thursday, according to the Steel Index.