September 29, 2014 / 4:47 AM / 5 years ago

Chinese steel, iron ore futures hit record low ahead of holiday

* Spot iron ore at five-year low after dropping for seven
weeks
    * Chinese industrial profits fell in August, latest weak
data

    By Manolo Serapio Jr
    SINGAPORE, Sept 29 (Reuters) - Steel and iron ore futures in
China fell to their lowest ever on Monday, extending steep
losses this month caused by abundant supply and slow demand
ahead of the week-long National Day holiday that kicks off on
Wednesday.
    Industrial profits in China dropped 0.6 percent in August
from a year before, reversing from a 13.5 percent rise in July,
the latest sign of weakness in the world's No. 2 economy.
 
    More Chinese data is due this week, including government
surveys on manufacturing activity and services, which could add
to the series of soft indicators that have fuelled fears of a
sharp slowdown if Beijng does not implement fresh stimulus
measures.
    The most traded rebar for January delivery on the Shanghai
Futures Exchange was down 2.3 percent at 2,530
yuan($412) a tonne, after falling to a record low of 2,523 yuan
earlier.
    The January iron ore contract on the Dalian Commodity
Exchange dropped 2.5 percent to 545 yuan per tonne,
just off a contract low of 542 yuan touched during the session.
    Rebar has fallen nearly 14 percent so far this month and
Dalian iron ore has declined 13 percent.
    "Oversupply remains a key issue for both steel and iron ore
and we don't see a recovery any time soon," said an iron ore
trader in Shanghai. 
    Some investors were either reducing or closing their
positions in futures markets ahead of the holidays, he said.
    China's apparent crude steel consumption dropped this year
for the first time since at least 2000 amid a slowing economy,
and Wang Xiaoqi, vice chairman of the China Iron and Steel
Association, said last week he expected the pace of production
to ease for the rest of 2014. 
    Iron ore for immediate delivery to China .IO62-CNI=SI was
steady at $78.60 a tonne on Friday, according to data compiled
by The Steel Index.
    That was the benchmark spot price's lowest level since
September 2009. It lost nearly 4 percent last week and stretched
its losing run into the seventh consecutive week.
    For the year, the commodity that makes the most revenue for
global miners Vale and Rio Tinto has lost
more than 41 percent and is on track to post its third straight
quarterly fall in July-September.
    Rio is offering 170,000 tonnes of 61 percent grade iron ore
at a tender closing later on Monday, traders said. A similar
cargo was sold on the globalORE platform at $78.50 a tonne
earlier in the day, down slightly from $79 on Friday, according
to the globalORE website.
    Apart from miners, Chinese mills with excess cargoes under
long-term contracts with suppliers have also been unloading
material onto the market, adding to the growing supply, and
buyers remain scarce, traders said.
    "There's plenty of cargo in the market and I believe mills
probably have enough already to cover their needs during the
holiday period," said the Shanghai-based trader, who last week
sold a 90,000-tonne cargo of Brazilian iron ore fines on behalf
of a northern mill.
    
  Rebar and iron ore prices at 0417 GMT
                                                                                                               
  Contract                          Last    Change   Pct Change
  SHFE REBAR JAN5                   2530    -59.00        -2.28
  DALIAN IRON ORE DCE DCIO JAN5      545    -14.00        -2.50
  SGX IRON ORE FUTURES OCT         77.94     -0.87        -1.10
  THE STEEL INDEX 62 PCT INDEX      78.6     +0.00        +0.00
  METAL BULLETIN INDEX             78.68     +0.05        +0.06
                                                                                                               
                                                                                                               
  Dalian iron ore and Shanghai rebar in yuan/tonne
  Index in dollars/tonne, show close for the previous trading day
 (1 US dollar = 6.1385 Chinese yuan)

 (Reporting by Manolo Serapio Jr.; Editing by Alan Raybould)
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