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Iron ore hits a two-week low on weak steel demand
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Analysts expect steel demand to gradually pick up
(Updates prices and most-traded contracts for rebar and HRC,
adds bullet points)
BEIJING, April 6 (Reuters) - Dalian and Singapore iron
ore futures retreated in afternoon trade on Thursday after
weaker-than-expected steel demand data disappointed the market.
Output of construction steel products, including rebar and
wire rod, declined by 1.04% week-on-week to 4.23 million tonnes
during the week as of April 6, while the apparent demand for
both fell by 6.7% week-on-week to 4.36 million tonnes over the
same period, data from consultancy Mysteel showed.
The most-traded September iron ore futures contract on the
Dalian Commodity Exchange (DCE) ended daytime trading
1% lower at a two-week low of 793 yuan ($115.35) a tonne,
following a 2.7% drop in the first two working days of the week
after sentiment was undermined by fresh intervention from the
state planner.
China's National Development and Reform Commission (NDRC)
said on Tuesday that it would step up supervision of iron ore
markets and urged futures companies not to deliberately
exaggerate price increases.
The Chinese market was closed on Wednesday for a public
holiday.
Similarly, on the Singapore Exchange, the benchmark May iron ore was 0.47% lower at a two-week low at $117.3 a tonne, as of 0702 GMT, marking a drop of 6.4% so far this week. "What matters most is the actual (steel) demand performance for the moment. If demand could not pick up in line with expectations, (iron ore) prices may feel further pressure," said a Shanghai-based iron ore analyst. Weak steel demand also clouded futures prices of other steel-making raw materials, including coking coal and coke. Coking coal fell 1.19% and coke slid 2.5%. Prices of steel futures were still on the downward trajectory. Rebar on the Shanghai Futures Exchange shed 1.5% to 3,938 yuan a tonne, hot-rolled coil dipped 1.42%, and stainless steel lost 1.84%.
"The (steel) demand has recently been relatively weak while production hovered at a high level, putting prices under downward pressure," analysts at Everbright Futures said in a morning note. Wire rod < SWRcv1> gained 0.38%. ($1 = 6.8749 Chinese yuan) (Reporting by Amy Lv and Dominique Patton; editing by Uttaresh Venkateshwaran and Sohini Goswami)
