September 22, 2014 / 4:17 AM / 6 years ago

China iron ore, rebar hit record lows on oversupply woes

* Shanghai rebar, Dalian iron ore fall 4 pct to hit daily
    * At five-year lows, CISA sees iron ore at $80 long term

    By Manolo Serapio Jr
    SINGAPORE, Sept 22 (Reuters) - Chinese steel and iron ore
futures slid 4 percent to their lowest on record on Monday,
plagued by worries of excess supply at a time when demand in the
world's top consumer of the two commodities is growing at a
slower pace.
    Abundant supply had pushed down spot iron ore prices by
nearly 40 percent this year to the lowest since 2009, marking
their sixth consecutive weekly loss last week.
    Iron ore for January delivery on the Dalian Commodity
Exchange was down 4 percent at 556 yuan ($91) a tonne
by midday, the lowest for the contract since the bourse launched
iron ore futures in October last year.
    The most-traded January rebar contract on the Shanghai
Futures Exchange also fell 4 percent to 2,619 yuan per
tonne, the lowest for a most-active contract since the exchange
introduced rebar in 2009.
    Both levels were the downside limits for the day for iron
ore and rebar futures.
    "Fundamentally, both the iron ore and steel markets are
oversupplied and I don't see any support for prices right now,"
said an iron ore trader in Shanghai.
    Other commodities traded in China also took a hit on Monday,
with rubber falling by its 5 percent downside limit and
cotton and soyoil dropping nearly 3 percent.
Shanghai-traded base metals also slumped, with zinc 
down 2.5 percent.
    China's slowing economy has raised the pressure on the
government to implement more stimulus measures, although the
country's finance minister said on Sunday that the government
will not dramatically alter its economic policy because of any
one economic indicator. 
    China's factory output grew at its weakest pace in nearly
six years in August, data showed earlier this month, prompting 
some economists to trim their 2014 growth forecasts for the
    The supply glut dragged spot iron ore prices to a new
five-year low on Friday, with the benchmark 62-percent grade
iron ore .IO62-CNI=SI falling 1.6 percent to $81.70 a tonne,
its lowest since September 2009, according to data compiled by
Steel Index.
    "Chinese steel mills offering to sell long-term cargoes into
the spot market have further exacerbated the problem of excess
near-term supply," Australia and New Zealand Banking Group
analysts said in a note to clients.
    Chinese steel producers have been cutting back on long-term
iron ore contracts in favour of cheaper spot cargoes, confident
that beaten-down prices are unlikely to rebound amid the first
global ore surplus in 10 years. 
    Li Xinchuang, deputy secretary general of the China Iron and
Steel Association, told a mining conference in Melbourne that he
expects iron ore to trade at around $80 a tonne in the long
  Rebar and iron ore prices at 0354 GMT
  Contract                          Last    Change   Pct Change
  SHFE REBAR JAN5                   2619   -110.00        -4.03
  DALIAN IRON ORE DCE DCIO JAN5      556    -23.00        -3.97
  SGX IRON ORE FUTURES OCT         79.48     -1.56        -1.92
  THE STEEL INDEX 62 PCT INDEX      81.7     -1.30        -1.57
  METAL BULLETIN INDEX             81.02     -2.04        -2.46
  Dalian iron ore and Shanghai rebar in yuan/tonne
  Index in dollars/tonne, show close for the previous trading day
 (1 US dollar = 6.1381 Chinese yuan)

 (Reporting by Manolo Serapio Jr.; Editing by Richard Pullin)
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