November 2, 2018 / 2:43 AM / 4 months ago

China iron ore falls more than 4 pct, heads for worst week since March

* Iron ore lower for 4th day, down as much as 4.3 percent

* Dalian coke, coking coal also fall sharply

* Steel rebar slips, on course for 4.1 pct weekly drop

* Industry has challenges ahead - China association

BEIJING, Nov 2 (Reuters) - China’s iron ore prices slumped more than 4 percent in early trade on Friday after the yuan strengthened, making imports cheaper, and amid expectations that the oncoming winter season will see reduced demand for the steelmaking raw material.

The most traded iron ore on the Dalian Commodity Exchange , for January delivery, fell for a fourth day, tumbling as much as 4.3 percent to a two-week low of 504.50 yuan ($72.81) and marking its biggest intra-day dip since June 19.

The contract is on course to end the week down 5.3 percent, which would be its steepest weekly drop since the week ended March 23.

Steel futures also declined. The most active construction steel rebar contract on the Shanghai Futures Exchange was lower for a fifth day, slipping as much as 1.8 percent to a three-week low of 4,025 yuan a tonne, while hot-rolled coil futures fell as much as 2.2 percent to 3,661 yuan a tonne before cutting losses to 0.8 percent.

Blast furnace utilisation rates at steel mills in China were down 0.69 percentage points at 67.54 percent this week, according to consultancy Mysteel. Northern China’s winter heating season, which will see tighter restrictions on industrial output, begins in the middle of this month.

“The physical industry is not good,” said Zhao Xiaobo, an analyst with Sinosteel Futures in Beijing, noting that the yuan had strengthened on Thursday, making iron ore imports cheaper for the world’s top steelmaker.

Liu Zhenjiang, secretary general of the China Iron and Steel Association (CISA), on Thursday said the sector was still facing difficulties, including changes in the international trade environment as well as the risk that high profits will encourage firms to expand, undermining state efforts to streamline.

Profits in China’s steel sector surged 86 percent from January to September this year thanks to a further recovery in prices as well as efforts to tackle overcapacity, CISA said.

Inventory of steel products at Chinese traders fell by 419,800 tonnes this week to 9.38 million tonnes, with rebar stocks falling 5.8 percent and hot-rolled coil inventories down 0.8 percent, according to Mysteel.

Among other steelmaking raw materials, Dalian coke fell as much as 3.4 percent to 2,295.50 yuan a tonne, and coking coal fell as much as 3.7 percent to 1,345 yuan a tonne in a broad plunge in the ferrous complex. ($1 = 6.9291 Chinese yuan) (Reporting by Tom Daly; Editing by Amrutha Gayathri)

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