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Iron Ore-Shanghai rebar hits 1-month low, ore extends fall
July 2, 2012 / 6:26 AM / 5 years ago

Iron Ore-Shanghai rebar hits 1-month low, ore extends fall

* China factory activity hits 7-month low
    * Sellers cut iron ore prices offers by $1/tonne

 (Updates rebar price)
    By Manolo Serapio Jr
    SINGAPORE, July 2 (Reuters) - China steel futures touched
one-month lows on Monday, reflecting a sluggish market that has
cut the appetite for raw material iron ore and prompted mills in
the world's top steel producer to curb output.
    Data showing factory activity in China hitting its lowest in
seven months is expected to keep the steel demand outlook weak
and prices under pressure, as shrinking new orders and the
steepest fall in export orders since December suggested no
immediate pick up for the world's second-biggest economy.
    The most active steel rebar contract for October delivery on
the Shanghai Futures Exchange fell 0.6 percent to close
at 4,044 yuan ($640) a tonne. It hit a session trough of 4,028
yuan, its lowest since June 4.
    The weakness in steel has kept Chinese mills off the spot
iron ore market, forcing sellers in China to cut prices for
cargoes from Australia and Brazil, the top two exporters, by
another $1 per tonne on Monday, data from industry consultancy
Umetal showed.
    "We haven't bought anything over the last week and probably
we'll only consider buying if the 62-percent grade falls to
around $130," said a Shanghai-based trader.
    Benchmark 62-percent grade iron ore .IO62-CNI=SI dropped
0.7 percent to $134 a tonne on Friday, the lowest since June 13,
according to Steel Index.
    Iron ore ended the second quarter down more than 9 percent
despite a 10-day rally in June fuelled by traders betting that
high steel output would encourage Chinese mills to restock on
iron ore.
    But declining steel prices, which fell 6 percent in
April-June, forced producers to cut output. 
    China's daily crude steel output from June 11 to 20 dropped
1.4 percent from the preceding 10 days, data from the China Iron
and Steel Association showed last week. 
    "A lot of people in the market had been too optimistic about
iron ore before, when there was no change in the steel market's
fundamentals," said another trader in Shanghai.
    "We are still seeing limited steel demand, so iron ore
prices may continue to be soft this week."
  Shanghai rebar futures and iron ore indexes at 0718 GMT
  Contract                          Last    Change   Pct Change
  SHFE REBAR OCT2                   4044    -24.00        -0.59
  PLATTS 62 PCT INDEX             135.25     -1.00        -0.73
  THE STEEL INDEX 62 PCT INDEX       134     -0.90        -0.67
  METAL BULLETIN INDEX            135.49     -0.55        -0.40
  Rebar in yuan/tonne
  Index in dollars/tonne, show close for the previous trading day
 ($1=6.3541 Chinese yuan)

 (Reporting by Manolo Serapio Jr.; Editing by Clarence Fernandez
and Miral Fahmy)

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