* Dalian iron ore headed for biggest monthly loss in a year
* Coking coal drops more than 4 pct
* China steel PMI hits 1-year high in May, but risks rising
By Manolo Serapio Jr
MANILA, May 31 Iron ore futures in China fell as
much as 4 percent on Wednesday to the lowest since November, and
were set for their biggest monthly decline in a year, amid lower
steel prices and a glut of the raw material.
Industry data showing activity in China's steel industry
expanded at the fastest pace in a year in May spurred gains in
Shanghai steel futures earlier in the session. But steel later
gave up those gains and traded lower as analysts warned demand
may ease in the coming summer months when construction activity
The most-traded iron ore contract on the Dalian Commodity
Exchange fell as low as 433.50 yuan ($63) a tonne, its
lowest since November 2016. It was down 3.2 percent at 437 yuan
The contract has fallen 14 percent so far in May, its
biggest monthly decline since May 2016.
Chinese markets reopened on Wednesday after being shut for
public holidays on Monday and Tuesday.
The decline in Chinese futures, along with a stubborn glut,
have fuelled a nearly 40 percent drop in spot iron ore prices
from this year's peak.
In the medium to longer term, iron ore should move towards
$50 per tonne, said Julius Baer analyst Carsten Menke.
"This is based on the assumption that Chinese steel
production has moved beyond its structural peak and would
decline steadily over the coming years," Menke said.
"At the same time, we see iron ore supplies from Australia
and Brazil expanding and displacing higher-cost Chinese
Last week, iron ore stocks at China's ports reached 136.6
million tonnes SH-TOT-IRONINV, the highest since consultants
SteelHome began tracking the data in 2004. That is enough to
build the Eiffel Tower in Paris more than 13,000 times over.
Iron ore for delivery to China's Qingdao port .IO62-CNO=MB
was unchanged at $58.50 a tonne on Tuesday, according to Metal
Bulletin. The spot benchmark has lost 15 percent in May, heading
for its steepest monthly drop in a year.
The most-active rebar on the Shanghai Futures Exchange
was down 0.9 percent at 3,182 yuan a tonne.
Steelmaking coal also tumbled. Coking coal traded on the
Dalian exchange fell 4.2 percent to 998.50 yuan per
tonne and coke dropped 3.7 percent to 1,487.50 yuan.
($1 = 6.8329 Chinese yuan)
(Reporting by Manolo Serapio Jr.; Editing by Christian