* Shanghai rebar drops 5 pct, sharpest in two months
* Dalian iron ore down 7 pct, coking coal slides 4 pct
* Growing steel supply amid slow demand
By Manolo Serapio Jr
MANILA, April 7 Chinese steel futures fell more
than 5 percent on Friday in the steepest single-day fall in two
months, dragging down raw materials iron ore and coking coal, as
investors worried about rising steel supply and tepid demand.
The sharp drop in futures has tamed buying interest in the
physical market, traders said, as people held back, waiting till
The most-active rebar on the Shanghai Futures Exchange
was down 5.1 percent at 3,032 yuan ($439) a tonne by
midday. The percentage drop was the sharpest since Feb. 3.
"The sudden drop in futures prices is holding back buying
interest in the physical market," said a Shanghai-based trader.
Average daily crude steel output in China, the world's top
producer, recovered to 1.75 million tonnes over March 11-20 from
around 1.6 million tonnes in the first 10 days last month, based
on estimates by the China Iron and Steel Association.
That puts the average daily output in the first 20 days of
March at 1.72 million tonnes, or equal to the average in
February, said Richard Lu from CRU consultancy.
Amid rising supply and slower than expected demand,
"end-users don't want to hold stocks" with prices also volatile,
Steel's slide caused raw materials to tumble as well. Iron
ore for September delivery on the Dalian Commodity Exchange
fell 7.1 percent to 525 yuan a tonne.
Stocks of imported iron ore at China's port stocks stood at
132.1 million tonnes as of March 31, according to SteelHome.
A week before, the port inventory reached 132.45 million
tonnes, the most since 2004 when SteelHome began monitoring the
stockpiles, reflecting slow appetite for the raw material.
That is enough iron ore to build Paris's Eiffel Tower nearly
13,000 times over and some Chinese ports are demolishing old
buildings to create more storage space, trading sources have
Dalian coking coal was also swept up in the
selloff, last down 4.4 percent at 1,276 yuan a tonne, while coke
- made from coking coal - slid 4.8 percent to 1,810.50
The drop was coking coal's deepest since February, erasing
some of this week's gain. On Wednesday, coking coal climbed more
than 8 percent - its biggest rally since November - after
Cyclone Debbie disrupted shipments from Australia, the biggest
supplier of steelmaking coal.
Iron ore for delivery to China's Qingdao port .IO62-CNO=MB
slipped 0.8 percent to $80.92 a tonne on Thursday, according to
($1 = 6.9009 Chinese yuan)
(Reporting by Manolo Serapio Jr.; Editing by Richard Pullin)