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Steel prices slid with cost support from raw materials
receding
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Dalian iron ore futures hit five-week low
(Updates prices, adds bullet points)
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. Some officials 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, they added.
The most-traded May iron ore futures contract on the Dalian
Commodity Exchange (DCE) ended daytime trading 2.15%
lower at 865.5 yuan ($125.64) a tonne, its lowest since Feb. 15.
On the Singapore Exchange, the benchmark April iron ore was down 2.26% at $120.7 a tonne as of 0704 GMT, the
lowest since Feb. 13.
"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 0.38% and the latter falling 0.58%.
"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.
Coal mines in several Chinese regions were ordered to carry
out safety inspections last month after an accident killed at
least two people and left more than 53 missing.
Steel prices continued to feel pressure from the raw
materials market. Rebar on the Shanghai Futures Exchange slid by 0.84% to 4,153 yuan a tonne, hot-rolled coil dipped 0.35%, wire rod shed 1.77% and
stainless steel lost 0.22%.
"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 = 6.8890 Chinese yuan)
(Reporting by Amy Lv and Dominique Patton in Beijing; Editing
by Rashmi Aich and Eileen Soreng)
