January 21, 2020 / 3:07 AM / a month ago

Shanghai steel futures slip amid downbeat China housing demand outlook

* Rebar down 1.1%, hot-rolled coil retreats from record high

* Dalian iron ore slips as BHP maintains 2020 output forecast

* Spot iron ore prices scale 4-month peak on supply concerns

By Enrico Dela Cruz

MANILA, Jan 21 (Reuters) - Shanghai steel futures slipped in early trade on Tuesday following four straight sessions of gains, as slowing housing demand in China, the world’s top steel producer and consumer, prompted some caution.

Benchmark Dalian iron ore prices were slightly lower, after BHP Group maintained its 2020 iron ore output forecast, providing some relief amid concerns over supply of the steelmaking raw material.

The Shanghai Futures Exchange’s most-traded construction steel rebar contract dropped as much as 1.1% to 3,562 yuan ($517.27) a tonne.

Hot-rolled steel coil further retreated after touching a record high on Monday, down 1.4% at 3,589 yuan a tonne by 0233 GMT.

“Data showing steel production in China rose 10.7% year-on-year in December buoyed markets late last week. However, the spectre of slowing demand from the housing sector has checked that exuberance,” said Daniel Hynes, senior commodity strategist at ANZ Research.

Chinese homebuilders should continue to face difficult conditions in 2020, with flat sales volume growth and modest price gains, Fitch Ratings said in a statement last month, although it revised its sector outlook to stable from negative.

Home prices in China, the world’s top steel producer and consumer, grew 0.4% in December from the prior month, after slowing down for six straight months.

FUNDAMENTALS

* The most-traded iron ore contract on the Dalian Commodity Exchange was down 0.4%, trading in a narrow range after advancing for two consecutive sessions with light volumes.

* BHP, the world’s biggest miner, maintained its full-year iron ore production forecast after reporting that its Australian output in the three months to December was nearly 2% lower than in the September quarter.

* Dalian iron ore prices have so far gained more than 3% this year on supply issues but trading volumes have steadily been weakening ahead of next week’s Lunar New Year break.

* Spot iron ore prices edged higher in sluggish trading on Monday, with the benchmark 62% iron-content ore settling at $97.20 a tonne, the highest since Sept. 16 last year, based on data from SteelHome consultancy. SH-CCN-IRNOR62

* Imported iron ore stocked at China’s ports fell for three weeks in a row, hitting 127.35 million tonnes on Friday, the lowest since the last week of September 2019, SteelHome data showed. SH-TOT-IRONINV

* Dalian coking coal slipped 0.3% and Dalian coke slumped 1.2%

* Shanghai stainless steel futures were down 0.3%. ($1 = 6.8862 yuan) (Reporting by Enrico dela Cruz; Editing by Shailesh Kuber)

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