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UPDATE 1-Shanghai steel falls for 9th day on weak demand outlook, pressures iron ore

Published 06/06/2017, 05:22 pm
Updated 06/06/2017, 05:30 pm
© Reuters.  UPDATE 1-Shanghai steel falls for 9th day on weak demand outlook, pressures iron ore

* Shanghai rebar has lost 11 pct in nine sessions

* Spot iron ore drops to lowest since October

* Dalian iron ore futures slip after two-day spike (Updates prices)

By Manolo Serapio Jr

MANILA, June 6 (Reuters) - Chinese steel futures fell for a ninth straight day on Tuesday, pressured by expectations of slow demand that have also dragged spot iron ore prices to their weakest level in nearly eight months.

Construction activity typically eases in China during summer, curbing steel consumption in the world's top user and producer of the material.

The most-active rebar on the Shanghai Futures Exchange SRBcv1 closed down 1 percent at 2,959 yuan ($436) a tonne. The construction steel product touched 2,906 yuan earlier, its lowest since May 5, and has lost 11 percent over the nine sessions to Tuesday.

Expectations of slower seasonal steel demand in China and moderating growth in property development have pulled down steel prices, said Ric Spooner, chief market analyst at CMC Markets.

"We're also seeing a bit of wind-back in speculative interest given that authorities have moved to tighten up on liquidity to some extent," said Spooner.

Weaker steel prices have curbed Chinese steel mills' appetite for raw material iron ore.

Iron ore for delivery to China's Qingdao port .IO62-CNO=MB dropped 3.3 percent to $55.90 a tonne on Monday, the lowest since Oct. 10, according to Metal Bulletin.

It was the steepest single-day decline since May 26 for the spot benchmark which touched $94.86 in February.

"Steel mills were also reportedly more concerned with paying off quarterly debts than procuring additional iron ore," Commonwealth Bank of Australia said in a note.

Adding pressure to spot prices, iron ore futures in China slipped on Tuesday after a two-day spike.

"Spot iron ore prices remained under pressure as steel futures continue to drift towards the support level of around 2,800 yuan. I think any upside in the Dalian price may be fairly limited," said Spooner.

The most-traded iron ore on the Dalian Commodity Exchange DCIOcv1 ended 0.8 percent lower at 432 yuan per tonne.

($1 = 6.7938 Chinese yuan)

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