Chinese iron ore futures slipped to a record low on Monday as an oversupply pressured prices, while rebar touched a two-week
high on a government plan to boost the efficiency of its fragmented steel sector.
Iron ore for September delivery on the Dalian Commodity Exchange fell to 427 yuan ($69) a tonne, the weakest for a most-traded contract since the
bourse launched it in October 2013. It was down 0.9 percent at 432 yuan by midday break.
Slower Chinese demand for steel and tighter environmental scrutiny that has shut some mills in the world's top producer and consumer curbed the country's appetite for spot iron ore cargoes, pulling spot prices to the lowest since
records began in 2008.
"Mills are still buying iron ore, but there's too much stocks right now. The government is also getting tougher on polluting mills so (iron ore) demand may drop in the short term," said a trader in China's eastern Shandong province.
Stocks of imported iron ore at China's major ports stood at 99.05 million tonnes last week after holding just above 100 million tonnes in the previous two weeks, data from consultancy Steelhome showed.
About 70 percent of the port stocks belong to Chinese mills and the rest are owned by traders, Steelhome said.
Iron ore for immediate delivery to China's Tianjin port .IO62-CNI=SI rose almost 1 percent to $55 a tonne on Friday, after hitting a record low of $54.50 last week, according to The Steel Index. It has fallen nearly a quarter this year, adding to a 47-percent slide in 2014.
The price slump has pushed smaller producers out of the market and made it tougher for bigger miners to seek funding. Australian miner Fortescue Metals Group, which last week scrapped a $2.5 billion debt issue, said on Monday it has no urgent need to refinance its borrowings.
Chinese steel futures got a boost from a government plan to build three to five giant steel mills and boost the crude steel output of its top 10 steelmakers to more than 60 percent of the country's total by 2025.
The most-active rebar on the Shanghai Futures Exchange was last up 1.6 percent at 2,527 yuan a tonne after reaching 2,545 yuan earlier, its loftiest since March 5.
Source: Reuters