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Shanghai steel falls for 9th day on weak demand outlook, pressures iron ore
Reuters Reuters
Monday June 05, 2017 10:20 PM
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* Spot iron ore drops to lowest since October
* Any upside in Dalian iron ore futures seen limited -analyst
By Manolo Serapio Jr
MANILA, June 6 (Reuters) - Chinese steel futures fell for a ninth straight day on Tuesday, pressured by expectations of slow demand that have also dragged spot iron ore prices to their weakest level in nearly eight months.
Construction activity typically eases in China during summer, curbing steel consumption in the world's top user and producer of the material.
The most-active rebar on the Shanghai Futures Exchange was down 1.1 percent at 2,955 yuan ($435) a tonne by 0207 GMT. The construction steel product touched 2,906 yuan earlier, its lowest since May 5, and has lost more than 11 percent over the nine sessions to Tuesday.
Expectations of slower seasonal steel demand in China and moderating growth in property development have pulled down steel prices, said Ric Spooner, chief market analyst at CMC Markets.
"We're also seeing a bit of wind-back in speculative interest given that authorities have moved to tighten up on liquidity to some extent," said Spooner.
Weaker steel prices have curbed Chinese steel mills' appetite for raw material iron ore.
Iron ore for delivery to China's Qingdao port dropped 3.3 percent to $55.90 a tonne on Monday, the lowest since Oct. 10, according to Metal Bulletin.
It was the steepest single-day decline since May 26 for the spot benchmark which touched $94.86 in February.
"Steel mills were also reportedly more concerned with paying off quarterly debts than procuring additional iron ore," Commonwealth Bank of Australia said in a note.
Unlike spot prices, iron ore futures in China were largely steady on Tuesday after a two-day spike.
"Spot iron ore prices remained under pressure as steel futures continue to drift towards the support level of around 2,800 yuan. I think any upside in the Dalian price may be fairly limited," said Spooner.
The most-traded iron ore on the Dalian Commodity Exchange was last up 0.1 percent at 436 yuan per tonne.
($1 = 6.7983 Chinese yuan)
(Reporting by Manolo Serapio Jr.; Editing by Joseph Radford)