China's iron ore and rebar futures extended losses on Thursday as investors shrugged off declines in iron ore inventories at ports in China, the world's biggest buyer of the steelmaking raw material.
According to data provider Mysteel, stockpiles of iron ore at major Chinese ports fell for the sixth consecutive week to reach 98.24 million tonnes as of Jan. 4, raising hopes that a slowdown in imports would relieve a supply glut.
But analysts said that the falling inventory rate was not due to any recovery in underlying demand from steel mills or their desire to restock, and prices were not likely to rise.
"Steel mills are buying less iron ore and the price has fallen continously since last year, which has also caused some iron ore trading firms to be shut out the market," said Hu Xiaodong, an analyst at Nanhua Futures in the eastern coastal city of Hangzhou.
"As a result, the amount of inventories at ports went down but I don't expect the price to rise dramatically before the Chinese New Year," Hu added.
Iron ore futures for May delivery on the Dalian Commodity Exchange fell 0.2 percent to 510 yuan ($82). The most traded May rebar contract on the Shanghai Futures Exchange shed 0.7 percent to end the morning at 2,568 yuan.
Iron ore prices fell 47 percent last year, with the economic slowdown in China continuing to weigh on steel demand. A property slump is also expected to last well into 2015, while export demand could be erratic.
China's annual economic growth probably slowed to 7.2 percent in the fourth quarter, the weakest since the depths of the global crisis, a Reuters poll showed. That might persuade policymakers to provide more stimulus to head off a sharper slowdown this year.
Benchmark 62 percent grade iron ore for immediate delivery to China .IO62-CNI=SI fell 0.28 percent to $70.90 a tonne on Wednesday, according to data compiled by the Steel Index.
Rebar and iron ore prices at 0330 GMT Contract Last Change Pct Change SHFE REBAR MAY5 2568 -18.00 -0.70 DALIAN IRON ORE DCE DCIO MAY5 510 -1.00 -0.20 THE STEEL INDEX 62 PCT INDEX 70.9 -0.20 -0.28 METAL BULLETIN INDEX 70.96 -0.53 -0.74 Dalian iron ore and Shanghai rebar in yuan/tonne Index in dollars/tonne, show close for the previous trading day.
Source: Reuters
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