Prices of steel and its raw materials pulled back on Tuesday, after recent gains that were fuelled by steel production cuts in top producer China as part of Beijing’s anti-pollution campaign as winter approaches.
Steel futures had been leading recent gains as investors factored in the output cuts in the northern part of China as early as this month, helping push up prices of raw materials iron ore and coking coal.
The most-active rebar on the Shanghai Futures Exchange was down 1.6 percent at 3,753 yuan ($568) a tonne by 0207 GMT, after rising for a third session on Monday to touch a one-month high.
Iron ore on the Dalian Commodity Exchange eased 1.6 percent at 453 yuan per tonne. Coking coal dropped 2.7 percent to 1,155 yuan.
“China’s iron ore and steel futures introduce an element of caution for buyers. While the spot iron ore price edged higher again, the Chinese futures markets were weaker,” Ric Spooner, chief market analyst at CMC Markets, said in a note.
“This raises a question about the durability of the bounce in iron ore following release of China’s strong import data last week.”
Spot iron ore prices recovered from a 3-1/2-month low late last week, rising above $60 a tonne and hitting a nearly three-week high on Monday as government data showed China’s iron ore imports surged to a record more than 100 million tonnes in September.
Iron ore for delivery to China’s Qingdao port rose 0.7 percent to $62.94 a tonne on Monday, according to Metal Bulletin. Global miner Rio Tinto , which supplies bulk of its iron ore to China, said third-quarter iron ore shipments rose 6 percent from a year ago to 85.8 million tonnes. Iron ore consumption in China could ease in coming months as the northern parts of the country order mills to cut output as early as this month, even ahead of the Nov. 15 deadline, including the top steelmaking city of Tangshan. “Multiple regions have started the winter off-peak production early, which in our view may lead to further falls in the (blast furnace) utilization rate in the near future,” Morgan Stanley analyst said in a report.
The utilization rate at steel mills’ blast furnaces across China stood at 81.9 percent as of Oct. 13, it said.
Source: Reuters & Hellenic Shipping News