The most-traded September iron ore on China's Dalian Commodity Exchange fell as much as 2.1% to 760 yuan ($110.52) a tonne, its lowest since March 24. Benchmark May iron ore on the Singapore Exchange shed as much as 1.9% to $114.35 a tonne, its weakest since Jan. 9.
Ahead of the release of Chinese retail sales, industrial output and gross domestic product data for the first quarter, its central bank bolstered liquidity support for the economy as it rolled over maturing medium-term policy loans with higher cash offerings on Monday. The People's Bank of China, however, kept the rate on 170 billion yuan worth of one-year medium-term lending facility loans to some financial institutions unchanged at 2.75% from the previous operation. "This is an important signal that the first quarter GDP report due on Tuesday will not be too soft. But we do not expect it to be particularly strong either," said ING Greater China chief economist Iris Pang. The downward pressure on iron ore prices from the anticipated steel production control policy in China, the world's top steel producer, also continued although there is no official declaration yet. "This is in line with our industry discussions and we expect steel production control measures to take place from June onward," Citi analysts said in a note. Other steelmaking inputs on the Dalian exchange were also weaker, with coking coal and coke down 0.5% and 1.2%, respectively, by lunch break.
Most steel benchmarks on the Shanghai Futures Exchange also dropped amid weak Chinese demand, with rebar down 0.2%, hot-rolled coil dipping 0.1%, and wire rod shedding 0.9%. Stainless steel climbed 2%.
(Reporting by Enrico Dela Cruz in Manila; editing by Uttaresh Venkateshwaran)
