for-phone-onlyfor-tablet-portrait-upfor-tablet-landscape-upfor-desktop-upfor-wide-desktop-up
Money News

China's steel, iron ore fall on weak demand concerns

BEIJING (Reuters) - China’s construction steel futures fell on Wednesday, as investors remained cautious about the strength of post-holiday demand from downstream users.

A machine works on blending the iron ore at Dalian Port, Liaoning province, China September 21, 2018. REUTERS/Muyu Xu/File Photo

Following the Lunar New Year holiday earlier this month, construction sites and manufacturing plants would typically restart business this week.

“Major markets in China have not completely resumed (spot) trading and steel prices in most regions are hovering at a low level,” analysts from Galaxy Futures said in a note.

Benchmark Shanghai rebar prices fell 2.3 percent to 3,590 yuan ($533.81) a tonne as of 0202 GMT.

Hot-rolled coil, a manufacturing-grade steel product, fell 1.8 percent to 3,590 yuan.

“Steel output is highly likely to increase after the holiday ... And the market focus will switch to demand strength from downstream users,” Jinrui Futures analysts said in a note.

Faltering steel prices also dragged on iron ore futures, as the market questioned if mills will delay restocking until steel sales pick up.

China’s producer price index (PPI) in January rose a meagre 0.1 percent from a year earlier, official data showed last week, raising concerns the world’s second-biggest economy may see the return of deflation as domestic demand cools.

Dalian iron ore futures ended a three-day winning streak on Wednesday, falling nearly 3 percent to 616 yuan a tonne.

Coke futures, however, edged up 0.1 percent to 2,072 yuan a tonne, supported by concerns over tight supply in coal mining hub Shanxi province.

A major coke plant, Shanxi Coking Co Ltd, said on Tuesday that it expects to trim coke output by around 220,000 tonnes due to an environmental restriction issued by the local government, effective from Feb. 16 to Mar. 31.

A bout of smog has been forecast for China’s northern region in late February.

China’s top steelmaking province Hebei issued an orange pollution alert last week, effective from Feb. 17, that could last until around Feb.22. Orange alerts require industrial companies to cut output by at least 30 percent.

($1 = 6.7252 Chinese yuan renminbi)

Reporting by Muyu Xu and Dominique Patton; editing by Richard Pullin

for-phone-onlyfor-tablet-portrait-upfor-tablet-landscape-upfor-desktop-upfor-wide-desktop-up