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UPDATE 1-Dalian iron ore retreats after rally, Shanghai rebar cuts gains

Published 12/10/2015, 06:26 pm
Updated 12/10/2015, 06:28 pm
© Reuters.  UPDATE 1-Dalian iron ore retreats after rally, Shanghai rebar cuts gains
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* Bleak China steel demand outlook as winter approaches -CRU

* Baosteel keeps prices steady in November (Updates prices)

By Manolo Serapio Jr

MANILA, Oct 12 (Reuters) - Iron ore futures in China pulled back from a two-week high on Monday as Shanghai rebar prices struggled to catch up with recent sharp gains in the steelmaking raw material amid a hazy outlook for demand.

Leading Chinese steelmaker Baoshan Iron and Steel 600019.SS said it would keep prices of its main products unchanged in November. urn:newsml:reuters.com:*:nB9N12803M

Baosteel reported a modest increase in first-half profit in August, but CRU Group analyst Wang Li said a lot of steelmakers were losing money.

"It's a very tough market for steelmakers," she said.

Apparent crude steel consumption in China has continued to shrink this year after dropping in 2014 for the first time in more than three decades amid a slowing economy.

The most-traded rebar for January delivery on the Shanghai Futures Exchange SRBcv1 closed up 0.2 percent at 1,847 yuan ($292) a tonne, off a session high of 1,868 yuan.

The price of the construction-used steel product was not far above a record low of 1,815 yuan reached on Sept. 30, just before China's week-long National Day holiday.

Wang said any gains in rebar, likely driven by firmer Chinese equities, may be fleeting with demand for construction products expected to wane as winter approaches.

The January iron ore contract on the Dalian Commodity Exchange DCIOcv1 slipped 0.8 percent to 380.50 yuan a tonne, having rallied as much as 5 percent on Friday to peak at 392 yuan, a level last seen on Sept. 22.

Iron ore prices will likely be under pressure in the current quarter, said Wang.

"We expect more supply additions in the fourth quarter than in the third quarter," she said, predicting iron ore to trade around $50 a tonne for the remainder of the year.

Iron ore exports from top supplier Australia face a less-than-average chance of being disrupted by cyclones in the upcoming cyclone season due to the El Nino weather pattern, the Australian Bureau of Meteorology said. urn:newsml:reuters.com:*:nL3N12C03S

Iron ore for immediate delivery to China's Tianjin port .IO62-CNI=SI climbed 1.3 percent to $55.50 per tonne on Friday, according to The Steel Index, helped by gains in Dalian futures.

Rebar and iron ore prices at 0705 GMT

Contract

Last

Change Pct Change SHFE REBAR JAN6

1847

+3.00

+0.16 DALIAN IRON ORE DCE DCIO JAN6

380.5

-3.00

-0.78 SGX IRON ORE FUTURES JAN

47.32

-0.68

-1.42 THE STEEL INDEX 62 PCT INDEX

55.5

+0.70

+1.28 METAL BULLETIN INDEX

56.01

+0.04

+0.07

Dalian iron ore and Shanghai rebar in yuan/tonne Index in dollars/tonne, show close for the previous trading day ($1 = 6.3229 Chinese yuan)

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