Labors work on a pile of iron ore at a steel factory in Tangshan in China’s Hebei Province November 3, 2015. Picture taken November 3, 2015. REUTERS/Kim Kyung-Hoon/Files
June 29 (Reuters) – Iron ore futures dropped on Tuesday, weighed down by easing steel demand in China due to unfavourable weather and threats of market intervention by Chinese authorities seeking to cool high prices.
The most-traded September iron ore on China’s Dalian Commodity Exchange ended daytime trading 2.7% lower at 1,153 yuan ($178.57) a tonne, after four sessions of gains.
The steelmaking ingredient’s most-active July contract on the Singapore Exchange slumped 2.3% to $207.75 a tonne by 0705 GMT.
Spot prices of steel construction materials fell further on Monday on weak demand, according to Chinese data provider Mysteel consultancy.
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Daily trading volumes of construction steel including rebar, wire rod and bar-in-coil among China’s 237 traders surveyed by Mysteel shrank 17,608 tonnes to 193,481 tonnes on Monday due to hot and humid weather.
Spot prices of benchmark 62%-grade iron ore in China remained above $200 a tonne, but were down 5.2% from the May 12 record high of $232.50.
The most-liquid Dalian iron ore contract has declined 15.1% over the same period, after Chinese market watchdogs reiterated warnings against hoarding and market speculation.
“Subdued prices in the next six months may be expected as a result of active government intervention, but (iron ore) may test $250/mt when Chinese buyers look to replenish depleted stockpiles,” said Howie Lee, an economist at OCBC Bank in Singapore.
Sentiment across China’s ferrous metals complex was also hit as steel mills have been ordered to limit or suspend their operations to minimise smog during the Communist Party centenary celebration in Beijing on Thursday, Sinosteel Futures analysts said in a note.
Rebar on the Shanghai Futures Exchange slipped 0.5%, while hot rolled coil inched up 0.1%. Stainless steel shed 0.8%.
Dalian coking coal lost 2.8%, while coke tumbled 4.3% on concerns over weak demand and an anticipated easing in tight domestic supply of coal.
Reporting by Enrico Dela Cruz in Manila; Editing by Subhranshu Sahu
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