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China iron ore futures fall for 8th day, heading for biggest weekly fall
April 3, 2015 / 4:08 AM / 3 years ago

China iron ore futures fall for 8th day, heading for biggest weekly fall

* Spot iron ore slumps nearly 5 pct to new lows
    * Bearish market sentiment driving down prices further

    SHANGHAI, April 3 (Reuters) - Chinese iron ore futures
dropped for the eighth straight session on Friday and were
heading for their biggest weekly fall ever amid weak buying
interest in global top consumer China and excess supply of the
steelmaking material.
    Benchmark 62 percent grade iron ore for immediate delivery
to China .IO62-CNI=SI plunged 4.7 percent on Thursday to
$46.70 a tonne, the lowest level since the Steel Index began
compiling the prices in late 2008.
    Steel mills that are struggling with slower-than-expected
demand recovery have capped production and held back building up
stocks on expectations that a supply glut would further depress
prices of the steelmaking ingredient.
     Iron ore futures for September delivery on the Dalian
Commodity Exchange dropped as low as 370 yuan ($60) a
tonne, weakest since the launch of the contract in October 2013.
    By 0302 GMT, the contract was trading 1.6 percent lower from
Thursday at 378 yuan, on track for its largest-ever weekly
decline of 10 percent and a third straight weekly drop.
    The low-cost production expansion by the world's largest
iron ore miners Vale, Rio Tinto  and
BHP Billiton  is expected to keep prices at
relatively low levels for a long time, analysts say.
    "Top miners are using low prices to take over market share
in China and squeeze others out of the market," said Li Yajing,
an analyst at Guangyong Futures in Guangzhou.
    Some investors have started to take long positions on
expectations of a technical rebound after the sharp declines in
iron ore prices, but analysts expect any potential gains will be
capped due to weak fundamentals. 
    "Some investors believe that prices have touched bottom and
have switched to a long position, but I expect the weak spot
market to drag prices lower," Li said.
    The most-traded October rebar contract on the Shanghai
Futures Exchange fell for the fourth straight session,
hitting a session low of 2,377 yuan, weakest since the bourse
started trading the contract in 2009.
    By 0302 GMT, prices were down 0.6 percent at 2,354 yuan,
headed for a sixth consecutive weekly loss. 
  Rebar and iron ore prices at 0302 GMT                                  
  Contract                          Last    Change   Pct Change          
  SHFE REBAR OCT5                   2354    -13.00        -0.55          
  DALIAN IRON ORE DCE DCIO SEP5      378     -6.00        -1.56          
  THE STEEL INDEX 62 PCT INDEX      46.7     -2.30        -4.69          
  METAL BULLETIN INDEX             47.08     -2.45        -4.95
  Dalian iron ore and Shanghai rebar in yuan/tonne                       
  Index in dollars/tonne, show close for the previous trading day        
 ($1 = 6.1962 Chinese yuan)

 (Reporting by Ruby Lian, David Stanway and Shanghai Newsroom;
Editing by Tom Hogue)

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