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UPDATE 1-Spot iron ore at near 3-week low, Dalian futures stretch losses
August 13, 2014 / 7:38 AM / 3 years ago

UPDATE 1-Spot iron ore at near 3-week low, Dalian futures stretch losses

* Shanghai rebar, Dalian iron ore hit lowest since late July

* Spot iron ore has fallen nearly 30 pct this year

* China daily steel output falls 4.6 pct in July from June (Adds China data, updates prices)

By Manolo Serapio Jr

SINGAPORE, Aug 13 (Reuters) - Spot iron ore prices fell to their lowest in almost three weeks as a softer steel market in top consumer China sapped buying interest for immediate cargoes, and weaker Dalian ore futures pointed to further losses.

Most commodities retreated on Wednesday with copper dropping to its weakest since June and Brent oil hit 13-month lows as geopolitical tensions from Iraq to Ukraine dimmed the outlook for the global economy.

China’s daily crude steel output fell 4.6 percent to 2.20 million tonnes in July from a record 2.31 million tonnes in June, government data showed, as mills cut production during the lean summer season. Output last month totaled 68.32 million tonnes, down 1.4 percent from June.

Benchmark 62-percent grade iron ore for immediate delivery to China .IO62-CNI=SI fell 1.4 percent to $94 a tonne on Tuesday, the lowest since July 24, according to data compiled by Steel Index.

Tuesday’s drop was the steepest for iron ore since it lost more than 2 percent on June 16 when it touched $89, its cheapest since September 2012.

The price of the raw material that is the top revenue earner for global miners Rio Tinto and Vale has fallen nearly 30 percent this year.

Offers of iron ore cargoes remain plenty, said an iron ore trader in Shanghai who is also selling shipments for Chinese steel mills that have excess stocks from their long-term contracts with miners.

“It’s not easy to locate a buyer because there’s a lot of competitors selling similar types of cargo in the market,” he said.

The most-traded January iron ore contract on the Dalian Commodity Exchange fell to 660 yuan ($107) per tonne, also the lowest since July 24. It closed down 0.6 percent at 662 yuan.

Apart from plentiful supply, weaker steel prices have also been a drag on iron ore. The price of steel billet in China’s key Tangshan area has fallen by 30 yuan per tonne from the weekend through Tuesday to 2,650 yuan, traders said.

Rebar for January delivery on the Shanghai Futures Exchange closed 0.6 percent lower at 3,044 yuan a tonne, just off the day’s bottom of 3,042 yuan, its lowest since July 25.

“Speculation that the Chinese government won’t introduce further stimulus this year and concerns over a weak construction sector seem to be renewing pessimism in steel,” Australia and New Zealand Bank said in a note.

Beijing has introduced measures to stimulate the economy since April, including hastening construction of railways and public housing and allowing local governments to loosen property curbs.

But the world’s No. 2 economy showed further signs of softening in July despite a burst of stimulus measures, suggesting more policy support may be needed to keep growth on track.

China’s factory output rose 9 percent in July from a year earlier, in line with forecasts, while fixed-asset investment and retail sales grew less than expected and the cooling property market showed further signs of deterioration.

Rebar and iron ore prices at 0704 GMT Contract Last Change Pct Change SHFE REBAR JAN5 3044 -17.00 -0.56 DALIAN IRON ORE DCE DCIO JAN5 662 -4.00 -0.60 SGX IRON ORE FUTURES SEP 93.24 -0.01 -0.01 THE STEEL INDEX 62 PCT INDEX 94 -1.30 -1.36 METAL BULLETIN INDEX 94.24 -0.98 -1.03 Dalian iron ore and Shanghai rebar in yuan/tonne Index in dollars/tonne, show close for the previous trading day

1 US dollar = 6.1608 Chinese yuan Reporting by Manolo Serapio Jr.; Editing by Biju Dwarakanath

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