* Chinese cities announce new restrictions on property
* Shanghai rebar hits 3-week low, Dalian iron ore at 2-week
* China economy may support markets against further declines
By Manolo Serapio Jr
MANILA, Oct 10 Iron ore and steel futures fell
in China on Monday as investors sold them off after a week-long
holiday amid ongoing government efforts to curb property
purchases, a campaign that some are worried may cool steel
demand for construction projects.
A number of Chinese cities including Beijing, Guangzhou,
Shenzhen, Suzhou, Chengdu and Wuhan - in a bid to combat rising
property prices - announced new restrictions on purchases and
mortgage down payments during China's National Day holiday in
the beginning of October.
China's central bank governor Zhou Xiaochuan said the
government is "paying close attention" to rising property values
in some cities and will take appropriate measures to promote the
real estate market's "healthy development".
The increasing measures to restrict property price growth in
China "will dampen construction demand, driving down the
nation's largest driver of commodity consumption," said
Commonwealth Bank of Australia analyst Vivek Dhar in a note.
The most-traded rebar, a construction steel product, on the
Shanghai Futures Exchange was down 1.4 percent at 2,232
yuan ($335) a tonne by 0243 GMT after falling as far as 2,209
yuan, the lowest since Sept. 19.
On the Dalian Commodity Exchange, iron ore was off
1 percent at 403.50 yuan. The steelmaking raw material touched
398 yuan earlier, a level last seen on Sept. 22.
Still, others said longer term that China's recovering
economy will prevent a price collapse.
Activity in China's manufacturing sector expanded again in
September, an official survey showed on Oct. 1, which may
indicate that recent positive momentum can be sustained.
The measures on the property market "may in a sense affect
sentiment but we don't really see a big crash in new (housing)
starts because China's underlying economic condition is
improving," said Helen Lau, analyst at Argonaut Securities in
Activity in the physical iron ore markets may pick up this
week after slow trading during China's Oct. 3-7 holiday.
Iron ore for delivery to China's Tianjin port .IO62-CNI=SI
stood at $54.40 a tonne on Friday, the lowest since July 1 and
down 1.5 percent for the past week, according to The Steel
"So long as these restrictions are applied to only tier 1
and tier 2 cities we may still see construction volumes lift in
tier 3 cities and below," Commonwealth's Dhar said in the note.
The lower tier cities accounted for 80-90 percent of new
construction volumes during China's commodity boom and could
still push China's commodity demand higher, said Dhar.
($1 = 6.6685 Chinese yuan)
(Reporting by Manolo Serapio Jr.; Editing by Tom Hogue)