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China iron ore, steel slip as demand worries weigh

Published 16/12/2015, 02:34 pm
© Reuters.  China iron ore, steel slip as demand worries weigh
BADI
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* Spot iron ore holds near $37/tonne

* Dalian iron ore, Shanghai rebar not far above record lows

* Baltic main index falls to all-time low

By Manolo Serapio Jr

MANILA, Dec 16 (Reuters) - Iron ore and steel futures in China edged lower on Wednesday, reflecting continued pressure on the commodities with no near-term recovery seen in demand from the world's top consumer.

The weakness in the ferrous derivatives followed early-week gains that proved fleeting. Spot iron ore, at less than $38 a tonne, is at its lowest since at least 2008 and has lost more than 47 percent this year.

Too much iron ore and shrinking steel demand in China have weighed on the steelmaking raw material this year and traders don't see any meaningful bounce soon.

"There can be no short-term reason for things to improve," said a Shanghai-based iron ore trader. "It's a bad phase that the industry is going through and this will take its toll on prices."

The most-traded May iron ore contract on the Dalian Commodity Exchange DCIOcv1 was down 0.3 percent at 291.50 yuan ($45) a tonne by 0300 GMT, not far off an all-time low of 282.50 yuan reached last week.

On the Shanghai Futures Exchange, construction-used rebar SRBcv1 dropped 0.2 percent to 1,666 yuan per tonne. The most-active May contract touched a record low of 1,618 yuan this month.

Amid weak industrial demand from China, the Baltic Exchange's main sea freight index .BADI , which gauges the cost of shipping cargoes such as iron ore, cement, grain, coal and fertiliser, slumped to an all-time low on Tuesday. urn:newsml:reuters.com:*:nL3N1444PN

ANZ Bank said the "change in the Chinese growth model will put the bulk shipping industry at risk, which has almost doubled its size in past decade, supported by robust Chinese growth."

China's economy, the world's second biggest, is heading for its slowest growth in a quarter of a century this year.

Iron ore for immediate delivery to China's Tianjin port .IO62-CNI=SI steadied at $37.50 a tonne on Tuesday, according to The Steel Index (TSI). It touched $37 on Friday, the weakest recorded by TSI since it began compiling data in 2008.

Prior to TSI records and during the annual pricing era that preceded the spot-based system, that level was the lowest since 2005.

Rebar and iron ore prices at 0300 GMT

Contract

Last

Change Pct Change SHFE REBAR MAY6

1666

-4.00

-0.24 DALIAN IRON ORE DCE DCIO MAY6

291.5

-1.00

-0.34 SGX IRON ORE FUTURES JAN

37.2

+0.24

+0.65 THE STEEL INDEX 62 PCT INDEX

37.5

+0.00

+0.00 METAL BULLETIN INDEX

39.36

+0.30

+0.77

Dalian iron ore and Shanghai rebar in yuan/tonne Index in dollars/tonne, show close for the previous trading day ($1 = 6.4632 Chinese yuan)

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