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China iron ore futures hit 3-week low on lean winter demand

Published 08/11/2019, 02:12 pm
Updated 08/11/2019, 02:14 pm
© Reuters.  China iron ore futures hit 3-week low on lean winter demand
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* Dalian iron ore slumps 2.4%, Singapore iron ore down 1%

* Benchmark spot 62% iron ore at lowest in 9 months

* Coal traders slow buying over tight import rules, spread

By Enrico Dela Cruz

MANILA, Nov 8 (Reuters) - Iron ore futures in China touched a three-week low in early trade on Friday, on track for their second weekly decline, as prospects of easing winter demand for steel weighed on prices of the key raw material.

Dalian Commodity Exchange's most-traded iron ore contract, with January 2020 expiry, fell 2.4% to 602.50 yuan ($86.37) a tonne, its weakest since October 18.

On the Singapore Exchange, the front-month December contract slipped 1.0% to $79.50 a tonne.

"Steel demand is slowing down due to the weather issue. In the northern part of China, the temperature is dropping, and very soon construction activities will be halted in many areas," a Shanghai-based trader said.

Plentiful iron ore supply is also weighing on both futures and spot prices, the trader said.

Benchmark spot 62% iron ore for delivery to China SH-CCN-IRNOR62 was steady for a third day session at $83.50 a tonne on Thursday, the weakest since Jan. 29 this year, data from SteelHome consultancy showed.

Imported iron ore inventories at Chinese ports are hovering around a six-month high, estimated at 131.65 million tonnes as of last Friday, based on SteelHome data. SH-TOT-IRONINV

The downbeat outlook for global steel demand is also a major concern for the industry and market participants, the trader said.

ArcelorMittal MT.AS , the world's largest steelmaker, has cut its forecasts for demand in its main U.S. and European markets. steel demand is forecast to rise just 1% next year, compared with this year's projected growth of 7.8%,

according to the World Steel Association, attributing the slowdown largely to the U.S.-Sino trade war.

FUNDAMENTALS

* The most-traded construction steel rebar on the Shanghai Futures Exchange SRBcv1 was 0.8% down, as of 0252 GMT.

* Hot-rolled steel coil SHHCcv1 , used in cars and home appliances, slipped 1%.

* Shanghai stainless steel SHSSc1 lost 0.4%.

* Dalian coking coal DJMcv1 edged down 0.6%, while Dalian coke DCJcv1 lost 0.3%

* Coal traders in China are holding off purchasing from overseas despite the upcoming heating season, as spreads between domestic and seaborne coal prices narrow and import rules tighten at Chinese customs. = 6.9761 yuan)

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