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Chinese steelmakers urged to cut output after price drops
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China Q1 apparent steel consumption up 1.9% y/y - group
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SGX iron ore benchmark down more than 20% from year's peak
(Updates prices)
By Enrico Dela Cruz
April 26 (Reuters) - Iron ore futures were mixed on
Wednesday, with prices in Singapore rebounding modestly, while
its Dalian benchmark extended losses after a China steel
industry group urged producers to curb output to keep themselves
afloat.
Steel prices in China have sunk amid a disappointing pace of
recovery in demand, posing challenges to the industry, according
to the China Iron and Steel Association (CISA), which has urged
producers to cut output to help ensure a stable cash flow.
Already, more than 30 steel mills have issued plans for
maintenance as of Tuesday, according to industry consultancy and
data provider Mysteel.
Iron ore's benchmark May contract on the Singapore Exchange rose 1.2% to $103.65 a tonne by 0720 GMT. It has fallen
more than 20%, however, from a peak of $132 on March 15.
In contrast, the steelmaking ingredient's most-traded
September contract on China's Dalian Commodity Exchange ended daytime trade 0.4% lower at 716.50 yuan
($103.52) a tonne. Earlier in the session, it hit 698 yuan, its
lowest since Dec. 8.
Even if Chinese appetite for steel products improves later
this year, iron ore will remain weak "for a long time" because
of the government's policy to curb output, Huatai Futures
analysts said in a note.
China is considering limiting its steel output this year,
according to analysts and recent unconfirmed reports, extending
a two-year-old policy aimed at curbing emissions by the world's
largest steel producer.
China's crude steel output in the first quarter rose 6.1%
from a year ago to 261.56 million tonnes, official data showed,
while apparent steel consumption grew 1.9% to 243.42 million
tonnes, according to CISA.
On the Shanghai Futures Exchange, rebar and
stainless steel were flat, while hot-rolled coil shed 0.4% and wire rod climbed 0.9%.
Coking coal and coke on the Dalian exchange dropped 2.8% and 2.1%, respectively.
(Reporting by Enrico Dela Cruz in Manila; Editing by Sonia Cheema and Varun H K)
