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UPDATE 1-China iron ore slides 4 pct amid weak demand, bloated stocks

Published 23/01/2018, 06:31 pm
© Reuters.  UPDATE 1-China iron ore slides 4 pct amid weak demand, bloated stocks

* Dalian iron ore falls to three-week low

* Stockpiles at China's ports at record above 150 mln T

* Rebar, coking coal also drop (Updates prices)

By Manolo Serapio Jr and Ruby Lian

MANILA/SHANGHAI, Jan 23 (Reuters) - Chinese iron ore futures dropped 4 percent on Tuesday, pressured by slow demand in the world's top consumer that has helped inflate stockpiles at the country's ports to a record above 150 million tonnes.

It marked the steepest single-day decline for the raw material since early December as China continues curbs on steel production to fight smog and with demand weakening over winter.

The most-traded iron ore for May delivery on the Dalian Commodity Exchange DCIOcv1 fell as much as 4.8 percent to 517 yuan ($81) a tonne, its lowest since Dec. 29, before closing down 4 percent at 521.50 yuan.

"Iron ore demand is really weak as steel mills are curbing output," said an official from a steel mill in northern China.

Winter in China slows activity in the construction sector, one of the biggest consumers of steel. China has also imposed restrictions on steel production in 28 cities from November through March in its anti-pollution campaign.

Underlining weak consumption, the volume of imported iron ore at China's ports reached 154.43 million tonnes on Jan. 19, up nearly 30 percent over 12 months and the most since 2004 when consultancy SteelHome began tracking the data. SH-TOT-IRONINV

That can make 97 million tonnes of steel, which could produce 107 million cars, or enough to reach the moon if lined up nose to tail. ore supplies continue to rise with port stocks testing record highs. With oversupply continuing, there is no foundation for iron ore prices to sustain gains," the China Iron and Steel Association said in a report published on its website.

Iron ore for delivery to China's Qingdao port .IO62-CNO=MB slipped 0.2 percent to $76.61 a tonne on Monday, according to Metal Bulletin.

Traders' appetite to replenish steel stockpiles has also waned amid worries over the outlook for demand.

"Traders have finished the first round of restocking and are cautious to conduct the second round, so in the short term prices are fluctuating," said Bai Jing, an analyst with Galaxy Futures in Beijing.

The most-active rebar on the Shanghai Futures Exchange SRBcv1 ended 0.7 percent down at 3,912 yuan a tonne. Coking coal DJMcv1 closed 0.4 percent lower at 1,284.50 yuan a tonne and coke DCJcv1 ended down 0.9 percent to 1,993 yuan.

($1 = 6.3986 Chinese yuan)

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