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China steel, iron ore hit one-month lows as sentiment sours
March 9, 2017 / 9:00 AM / 7 months ago

China steel, iron ore hit one-month lows as sentiment sours

* Buying interest for steel weakens as prices drop - trader

* China producer inflation fastest in nearly nine years

By Manolo Serapio Jr

MANILA, March 9 (Reuters) - Iron ore and steel futures in China fell to one-month lows on Thursday as investors pared back positions after pushing both commodities to multi-year highs last month.

Amid stronger prices of steel and other raw materials last month, China’s producer price inflation accelerated to its fastest pace in nearly nine years, boosting profits for industrial companies worldwide.

But buying interest for steel products weakened from last week as prices dropped, said a Shanghai trader.

“People were about to buy, but when they see prices dropping they will hold back,” he said.

The most-active rebar on the Shanghai Futures Exchange closed down 2 percent at 3,389 yuan ($490) a tonne, after hitting a near one-month low of 3,348 yuan. The construction steel product touched a three-year high of 3,648 yuan on Feb. 27.

Iron ore on the Dalian Commodity Exchange dropped 1.1 percent to end at 658 yuan per tonne, having fallen to a one-month trough of 643 yuan earlier in the session.

The price of the steel-making raw material hit 641.50 yuan on Feb. 21, its strongest since the exchange launched the contract on October 2013.

The market still expects Chinese steel demand to pick up in tandem with construction activity as the weather gets warmer, the Shanghai trader said.

“Mills are still looking for raw materials, although they are talking about lower prices at the moment,” he said.

Iron ore for delivery to China’s Qingdao port .IO62-CNO=MB slid 2.9 percent to $87.19 a tonne on Wednesday, the lowest since Feb. 10, according to Metal Bulletin.

The fall in rebar futures “weighed on buying interest in the spot market, leaving sellers with little choice but to cut prices,” the Metal Bulletin stated.

“A number of mills and traders who have built up large inventories are not expected to make big concessions, however, as they are expecting a supply shortage amid a government clampdown on the production of substandard steel.”

$1 = 6.9105 Chinese yuan Reporting by Manolo Serapio Jr.; Editing by Sherry Jacob-Phillips

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