China’s iron ore falls but de­mand seen in­tact

Global Times - - Biz Markets -

Chi­nese iron ore fu­tures dropped more than 2 per­cent on Wed­nes­day as a slide in steel prices dragged down the raw ma­te­rial, al­though firm steel de­mand in the world’s top con­sumer of the metal is ex­pected to cap any losses.

The fall in both com­modi­ties came af­ter re­cent rapid gains that stretched the win­ning streak in re­bar steel, used in the con­struc­tion busi­ness, to a fourth straight month in Au­gust, and in iron ore to a third con­sec­u­tive month.

“Prices have gone up quite a lot so sen­ti­ment is very frag­ile,” said He­len Lau, an­a­lyst at Arg­onaut Se­cu­ri­ties in Hong Kong.

The sell- off may be due to short- term traders cash­ing in on re­cent mar­ket gains, she said.

The most- ac­tive re­bar on the Shang­hai Fu­tures Ex­change was down 0.82 per­cent at 3,868 yuan ($ 587.5) a ton.

The most- traded iron ore on the Dalian Com­mod­ity Ex­change was down 2.66 per­cent at 548 yuan per ton af­ter fall­ing to as low as 543 yuan, its weak­est level since Au­gust 17.

Lau said steel de­mand in China re­mains sup­ported by steadily grow­ing in­vest­ment in the coun­try’s prop­erty sec­tor, even though the lat­est data showed a slower in­crease in fixed- as­sets in­vest­ment in the first seven months of 2017.

Stock­piles of re­bar at Chi­nese traders stood at 3.88 mil­lion tons as of Au­gust 25, still less than half of this year’s peak of 8.4 mil­lion tons reached in Fe­bru­ary, ac­cord­ing to Shang­hai- based SteelHome con­sul­tancy.

That in­di­cated strong de­mand for re­bar, traders and an­a­lysts say.

In­ven­tory of iron ore at China’s ports have also been de­clin­ing, drop­ping for a fourth straight week to 133.45 mil­lion tons last week, the low­est since May.

Iron ore for de­liv­ery to China’s Qing­dao port slipped 1 per­cent to $ 76.36 a ton on Wed­nes­day, ac­cord­ing to Metal Bul­letin.

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