December 19, 2018 / 3:23 AM / a month ago

China steel raw materials fall as demand concerns persist

* Dalian coking coal falls nearly 4 pct

* Dalian coke slips over 2 pct

* Shanghai rebar little changed

By Enrico Dela Cruz

MANILA, Dec 19 (Reuters) - Chinese coking coal and coke futures fell on Wednesday as steel producers continued to seek lower prices for the steelmaking raw materials due to shrinking profit margins.

Dalian coking coal fell as much as 3.7 percent to 1,183.5 yuan ($171.80) per tonne, while coke dropped up to 2.1 percent to 1,960 yuan per tonne.

The most traded iron ore on the Dalian Commodity Exchange eased 0.2 percent to 485 yuan per tonne by 0248 GMT.

“The market remains a bit bearish,” said Richard Lu, an analyst at CRU consultancy in Beijing. “Over the past several weeks, coke prices declined because of narrow margins at the steel mills, and they have demanded for lower coke prices, and producers have accepted it.”

Profit margins at Chinese steel mills narrowed sharply in November amid plentiful supply as the government scrapped blanket production restrictions for winter aimed at tackling smog. Beijing instead allowed cities and provinces to set their own output curbs based on emissions.

Prices of steel products, however, remained supported amid hopes demand will get a boost next year.

The most-active rebar contract on the Shanghai Futures Exchange was little changed at 3,417 yuan per tonne, while hot rolled coil rose 0.4 percent to 3,446 yuan per tonne.

“The Chinese government is shifting their focus for 2019 to look at pushing for (higher GDP growth) and lesser on supply-side reform,” said Darren Toh, a data scientist with Singapore-based steel and iron ore data analytics company Tivlon Technologies.

“Supply-side reform has been done for three years and market is pricing in for more infrastructure demand in 2019.”

Spot iron ore for delivery to China SH-CCN-IRNOR62 was steady at $69.50 per tonne on Wednesday, according to SteelHome consultancy. ($1 = 6.8890 Chinese yuan) (Reporting by Enrico dela Cruz; Editing by Subhranshu Sahu)

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