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Steel, raw material prices drop in China before holiday

Chinese rebar steel futures fell more than 1 percent to a two-week low on Thursday, dragging down prices of steelmaking raw materials as activity in China slows down ahead of a week-long holiday.

China’s financial markets will be closed on Oct. 1-5 for the National Day holiday.

The most-active January rebar on the Shanghai Futures Exchange dropped 1.2 percent to close at 4,008 yuan ($583) a tonne, after earlier hitting 3,998 yuan, its weakest since Sept. 12.

Coking coal traded on the Dalian Commodity Exchange fell 1.4 percent to 1,268.50 yuan a tonne and coke slid 2 percent to 2,253.50 yuan.

Steel’s retreat also pushed down iron ore prices.

The most-traded Dalian iron ore contract for January delivery rose as far as 506 yuan a tonne, its loftiest since Sept. 20, before giving up 0.9 percent to settle at 497.50 yuan.

Some pre-holiday restocking activities have helped spur iron ore trading in China, ANZ analysts said in a note.

Iron ore stocked at major Chinese ports stood at 149.1 million tonnes on Sept. 21, the lowest level since December last year, data tracked by SteelHome consultancy showed.

The port inventory hit a record high of 161.98 million tonnes in June.

But there’s “still enough supply to cover demand so iron ore prices are unlikely to increase significantly,” said a Shanghai-based iron ore trader.

“If you look at the medium to long term, there’s no change in iron ore fundamentals.”

Since late March, spot iron ore prices have traded in a tight range between $63 and just below $70 a tonne.

On Wednesday, benchmark spot iron ore for delivery to China’s Qingdao port slipped 0.4 percent to $68.96 a tonne, a 1-1/2-week low, according to Metal Bulletin.

Source: Reuters

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