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UPDATE 1-China iron ore slides, coke cuts gains as demand woes prevail

Published 09/11/2017, 06:40 pm
Updated 09/11/2017, 06:50 pm
© Reuters.  UPDATE 1-China iron ore slides, coke cuts gains as demand woes prevail
BARC
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* Prices of rebar and its raw materials come off multi-week highs

* Demand for steelmaking ingredients seen cut by steel curbs (Adds market comment, updates prices)

By Manolo Serapio Jr

MANILA, Nov 9 (Reuters) - Chinese iron ore futures pulled back from a seven-week high in volatile trading on Thursday as investors took profits in the steelmaking raw material, demand for which was at risk as many steel mills cut output as part of Beijing's fight against smog.

Other steelmaking ingredients - coking coal and coke - also retreated from multi-week peaks after rallying in morning trade, along with rebar steel futures.

The most-traded iron ore contract on the Dalian Commodity Exchange DCIOcv1 closed down 1.2 percent at 460.50 yuan ($69) a tonne, after rising as much as 2.9 percent to an intraday peak of 479.50 yuan, its strongest since Sept. 21.

The morning run-up in the ferrous market may have been largely due to speculative investors aiming for quick gains, said a coke trader in Tianjin.

Demand for iron ore and coking coal may reduce, the trader said, as northern Chinese cities require their steel mills to cut output over winter, or from this month through March, as part of China's campaign for clearer skies.

"Given the steel mills are about to switch off and stockpiles already accumulated the next leg of physical buying is happy to wait for now it seems," Matt France, head of institutional sales for metals in Asia at Marex Spectron, said in a note.

After surging as much as 5 percent to a a seven-week high, coking coal DJMcv1 ended up 2.1 percent at 1,207.50 yuan per tonne. Coke DCJcv1 closed nearly flat at 1,839 yuan after earlier rallying 5.8 percent to a three-week peak.

The most-active rebar on the Shanghai Futures Exchange SRBcv1 , which touched a two-week high of 3,846 yuan intraday, ended at 3,760 yuan, up 0.7 percent.

In the spot market, iron ore prices continued to slip from this week's highs amid slow demand.

Iron ore for delivery to China's Qingdao port .IO62-CNO=MB eased 0.6 percent to $62.26 a tonne on Wednesday, according to Metal Bulletin. The spot benchmark reached a six-week high on Monday.

China's iron ore imports fell 23 percent in October from a record level in the previous month to 79.49 million tonnes, data on Wednesday showed, and analysts say purchases will remain low in coming months as Beijing enforces the production restrictions over winter. swathes of China's industrial sector curtailed or on halt for the environmental related outages, steel producers still producing are drawing upon inventories, lessening the need for spot (iron ore) imports," Barclays (LON:BARC) analysts said in a note.

($1 = 6.6316 Chinese yuan)

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