SHANGHAI, May 30 (Reuters) - Shanghai rebar prices fell for the fourth straight day on Thursday to hit near nine-month lows on concerns about steel overcapacity in China and a sluggish economy.
Traders expected further declines in the near term after steelmaking raw material iron ore hit its lowest level in more than seven months on Wednesday.
The most active rebar futures contract on the Shanghai Futures Exchange dropped to a session low of 3,420 yuan ($560) a tonne on Thursday, a level last seen on Sept.7. It was at 3,438 yuan by the midday break, down about 1 percent, and not very far from an all-time low of 3,376 yuan set in September.
Rebar is down 3.7 percent this week in the world’s largest steel producer and consumer, and has fallen 22 percent from its 2013 peak in early February.
That has led to steep losses in iron ore.
“Steel mills are unprofitable and destocking raw material due to worsening surplus and waning demand,” said an iron ore trader in Beijing.
Current steel product inventories in China could be about 6.5 million tonnes higher compared to last year, according to the China Iron and Steel Association, which also forecast price declines.
The International Monetary Fund has cut its growth forecast for China this year to 7.75 percent from 8 percent, citing a weak world economy and exports, adding to concerns that the world’s second-largest economy is losing momentum.
Benchmark 62 percent grade iron ore .IO62-CNI=SI fell 4.2 percent to $112.90 a tonne on Wednesday, the lowest since Oct. 16, 2012, according to data provider Steel Index.
Some traders expect iron ore prices, which are down 22 percent so far this year, to fall to $100 a tonne or even lower in coming weeks.
The bearish sentiment was reflected in the declines in iron ore swaps.
“The June contract was $107.5 on Thursday, down $1 from Wednesday, and there are very few buyers in the physical market,” said Peter Cho, an iron ore derivatives broker with ICAP in Singapore. ($1 = 6.1267 Chinese yuan) (Editing by Muralikumar Anantharaman)