Sluggish demand, rising supply send Chinese iron ore to over half-year low
BEIJING, Aug 19 (Reuters) - Benchmark iron ore futures in China extended losses for the third consecutive session, diving more than 7% and sending the price to its lowest since Feb. 5, dented by gloomy demand and a forecast of an increase in supply.
China's steel consumption is expected to soften in the second half, especially in the construction sector, due to tightening property policy, the country's steel association and analysts said.
"The logic is, the weaker demand is, the stricter steel production curbs will be," analysts at CITIC Securities said in a note.
"Under the assumption of cooling demand, increase in steel prices will be limited ... but pressure on iron ore is significant."
Meanwhile, iron ore supplies are also expected to gain from domestic miners, Brazil, and other non-mainstream countries, according to Li Wentao, analyst with Tianfeng Futures.
With iron ore inventories at mills relatively low, there could be restocking demand in coming months, Li added.
The most traded iron ore futures on the Dalian Commodity Exchange, for January delivery, closed down 7.2% to 763 yuan ($117.44) per tonne, after plunging to 8% earlier during the session.
Spot prices of iron ore with 62% iron content for delivery to China <SH-CCN-IRNOR62> fell $3.5 to $158.5 a tonne on Wednesday, according to data from SteelHome consultancy.
Steel prices on the Shanghai Futures Exchange also tumbled.
Construction used rebar slumped 3.9% to 5,017 yuan a tonne, the lowest since June 23. Hot rolled coils, used in the manufacturing sector, slumped 2.9% to 5,389 yuan a tonne at the close.
Stainless steel futures on the Shanghai bourse, for September delivery, dived 3.6% to 17,625 yuan a tonne.
FUNDAMENTALS
* Dalian coking coal futures jumped 3.1% to 2,287 yuan per tonne.
* Coke futures slipped 0.6% to 2,875 yuan a tonne.
* Swedish green steel venture HYBRIT had made the world's first customer delivery of steel produced without using coal as it looks to revolutionize an industry that accounts for around 8% of global greenhouse gas emissions. ($1 = 6.4967 Chinese yuan renminbi) (Reporting by Min Zhang; Editing by Krishna Chandra Eluri and Shounak Dasgupta)
