September 25, 2014 / 8:11 AM / 4 years ago

UPDATE 1-China steel futures fall over 3 pct to record low as demand limps

* China steel consumption down in Jan-August on slowdown -CISA

* Dalian iron ore hits lowest since 2013 launch, SGX futures drop (Updates prices)

By Manolo Serapio Jr

SINGAPORE, Sept 25 (Reuters) - China’s rebar steel futures sagged to a fresh record low on Thursday, falling more than 3 percent amid weak demand that an industry official said was driven by a slowdown and restructuring of the economy.

That piles more pressure on spot prices of steelmaking raw material iron ore that have already lost nearly 41 percent this year, falling below $80 a tonne this week to their lowest since 2009. Iron ore futures in Dalian slumped to their weakest since launching last year.

The most-traded rebar contract for January delivery on the Shanghai Futures Exchange dropped as much as 3.3 percent to an all-time low of 2,538 yuan ($414) a tonne, before closing at 2,548 yuan, down 2.9 percent.

Construction-used rebar has dropped 30 percent this year and 12 percent so far in September.

Apparent crude steel consumption in China, the world’s top consumer and producer, fell 1.9 percent to 61.9 million tonnes in August and was down 0.3 percent at 500 million tonnes in the first eight months of the year, Wang Xiaoqi, vice-chairman of the China Iron and Steel Association, told an industry conference in Dalian.

Wang expects crude steel output to hit 826 million tonnes this year, up 6 percent from 2013, with the production pace slowing for the remaining months.

China’s steel output grew 7.5 percent to 779 million tonnes last year.

The most-active January iron ore contract on the Dalian Commodity Exchange fell to 549 yuan a tonne, its lowest since the bourse launched iron ore futures in October last year. It closed 1.8 percent weaker at 552 yuan.

Small to medium-sized Chinese mills have reduced their iron ore inventory to two to three weeks’ consumption compared to a month or more previously amid falling prices and tighter cashflow, said a Shanghai-based iron ore trader.

“We still have 100,000 tonnes of iron ore that we purchased a month ago. It’s a tough market,” he said.

Iron ore for immediate delivery to China .IO62-CNI=SI was unchanged at $79.40 a tonne on Wednesday, according to data compiler Steel Index. Rebar and iron ore prices at 0741 GMT Contract Last Change Pct Change SHFE REBAR JAN5 2548 -76.00 -2.90 DALIAN IRON ORE DCE DCIO JAN5 552 -10.00 -1.78 SGX IRON ORE FUTURES OCT 78.73 -0.86 -1.08 THE STEEL INDEX 62 PCT INDEX 79.4 +0.00 +0.00 METAL BULLETIN INDEX 79.9 +0.21 +0.26 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 Joseph Radford and Biju Dwarakanath)

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