BEIJING, March 22 (Reuters) - Dalian and Singapore iron
ore futures extended losses on Wednesday, with demand prospects
temporarily weighed down by China's consideration to cut its
crude steel output by around 2.5%.
The target was proposed by policymakers at a meeting last
week but it has not yet been finalised, said sources familiar
with the matter, adding that some officials at last week's
meeting said a cut of 2.5% was too high as the economy was still
recovering and the target was expected to be set before the end
of June.
The most-traded May iron ore futures contract on the Dalian
Commodity Exchange (DCE) traded 1.47% lower at 871.5
yuan ($126.54) a tonne as of 0209 GMT, its lowest since February
15.
On the Singapore Exchange, the benchmark April iron ore was 1.53% lower at $121.6 a tonne as of 0222 GMT, the
lowest since Feb. 14.
"The news [of crude steel output cuts] may provoke worry in
the raw materials market in the short run," said Kevin Bai, a
Beijing-based steel analyst at consultancy CRU group.
Likewise, prices of other steelmaking ingredients such as
coking coal and coke slipped further with the former declining 1.68% and the latter falling 1.24%.
"Supply [of coking coal] picked up after many coal producers
resumed production following the accident earlier last month
while consumers and traders slowed their purchasing. Mounting
inventories weighed on prices," analysts at Huatai Futures said
in a note.
Steel prices continued to feel the pressure from the raw
materials market. Rebar on the Shanghai Futures Exchange slid by 1.27% to 4,135 yuan a tonne, hot-rolled coil dipped 0.65%, wire rod shed 2.14% and
stainless steel lost 0.41%.
"The cost support to steel prices receded to some degree
after prices (of raw materials) have recently posted evident
falls," analysts at Everbright Futures said in a morning note.
($1 = 6.8871 Chinese yuan)
(Reporting by Amy Lv and Dominique Patton in Beijing; Editing
by Rashmi Aich)
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