* Iron ore stocks at China ports highest since 2004
* Shanghai rebar drops for second day
* Spot iron ore hits lowest level in a year
By Manolo Serapio Jr
MANILA, June 14 China's iron ore futures tumbled
to their weakest level in almost seven months on Wednesday,
underlining concerns over surplus supply that has pulled down
spot prices to their lowest in a year.
Stockpiles of imported iron ore at China's ports reached
140.05 million tonnes on June 9, the most since 2004, according
to data tracked by SteelHome consultancy. SH-TOT-IRONINV
"Rising seaborne supply and high port stockpiles continue to
weigh on prices," Commonwealth Bank of Australia analyst Vivek
Dhar said in a note.
"Demand has also weakened as Chinese steel mills look to use
more scrap steel in their blast furnaces," said Dhar, adding
that scrap steel prices have fallen sharply following Beijing's
crackdown on induction furnaces.
China has vowed to shut by the end of June all producers of
highly polluting low-quality steel that use induction furnaces
which consume steel scrap as raw material.
The most-traded iron ore contract for September delivery on
the Dalian Commodity Exchange was down 2.5 percent at
416.50 yuan ($61) a tonne by 0200 GMT. It earlier fell as far as
412.50 yuan, the lowest since Nov. 21.
Weaker futures dampened bids in the spot iron ore market,
traders said, dragging the spot benchmark by nearly 3 percent.
Iron ore for delivery to China's Qingdao port .IO62-CNO=MB
fell 2.8 percent to $53.36 a tonne on Tuesday, the lowest since
June last year, according to Metal Bulletin.
Iron ore has lost nearly a third of its value this year,
underperforming other commodities such as nickel and oil
Softer steel prices also weighed on iron ore, with rebar
futures in Shanghai down for a second straight day. The
most-active rebar on the Shanghai Futures Exchange
slipped 1.2 percent to 2,959 yuan per tonne.
ANZ analysts said the weakness in steel prices was driven by
a new directive from China's top state planner that there would
be no approval of new entities investing in vehicles powered by
The policy issued by the National Development and Reform
Commission this week extends to the automotive sector Beijing's
fight against overcapacity and "zombie" firms that is already
underway in the coal and steel sector.
Zombie firms are economically unviable enterprises that
often survive with the support of local governments and banks.
($1 = 6.7973 Chinese yuan)
(Reporting by Manolo Serapio Jr.; Editing by Joseph Radford)