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REFILE-UPDATE 1-China iron ore slumps 6.5 pct to weakest since January, hit by steel glut
April 18, 2017 / 7:58 AM / 7 months ago

REFILE-UPDATE 1-China iron ore slumps 6.5 pct to weakest since January, hit by steel glut

(Reworks headline to delete extraneous word)

* Shanghai rebar drops 4 pct to weakest since February

* Spot iron ore falls to lowest since Nov, down 16 pct this year

By Manolo Serapio Jr

MANILA, April 18 (Reuters) - Iron ore futures in China fell more than 6 percent on Tuesday to their weakest level since January, pressured by a sustained drop in steel prices amid oversupply worries.

Shanghai rebar slipped to 10-week lows as output in the world’s top steel producing country showed no signs of abating despite tepid demand and government efforts to cut capacity.

The most-traded iron ore on the Dalian Commodity Exchange closed down 6.5 percent at 468 yuan ($68) a tonne, just off a session trough of 463.50 yuan, its lowest since Jan. 9.

The most-active rebar on the Shanghai Futures Exchange fell 3.7 percent to end at 2,824 yuan per tonne, after earlier hitting a session low of 2,815 yuan, a level last seen on Feb. 7.

“Oversupply concerns in China’s steel market curbed demand” for raw material iron ore, Commonwealth Bank of Australia analyst Vivek Dhar said in a note.

China’s crude steel output reached a record 72 million tonnes in March as mills ramped up output in anticipation of a pickup in demand that has remained slow, government data released on Monday showed.

A more than doubling in premium coking coal prices since Cyclone Debbie hit top producer Australia last month has also squeezed margins of Chinese steel mills, further reducing their appetite to purchase iron ore, wrote Dhar.

“In any case, steel market-related weakness will continue to push iron ore demand lower,” he said, adding that iron ore supply is also rising, including from marginal exporters that responded to the early-year rally in prices. The bank has forecast iron ore to drop to $60 by the December quarter.

Iron ore for delivery to China’s Qingdao port .IO62-CNO=MB slid 3.5 percent to $66.25 a tonne on Monday, according to Metal Bulletin.

That was the lowest level since November for the spot benchmark which has lost 16 percent this year.

Tuesday’s losses in steel spread to other raw materials, with coking coal on Dalian sliding 2.9 percent to 1,096.50 yuan per tonne and coke dropping 2.3 percent to 1,604 yuan. ($1 = 6.8885 Chinese yuan) (Reporting by Manolo Serapio Jr.; Editing by Tom Hogue and Amrutha Gayathri)

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