Shanghai rebar hits 7-week low as winter slows China demand
The weakness in the steel market could curb demand among Chinese mills for iron ore, cutting an upturn in prices of the raw material that stretched its winning run into a sixth straight week last week.
China's steel market has entered a weak season as the cold winter dampens construction activity in northern China, hitting demand for rebar, said Wang Jin, an analyst with Everbright Futures in Shanghai.
The most traded rebar contract for May delivery on the Shanghai Futures Exchange hit a session low of 3,549 yuan ($570) per tonne, its weakest since September 27. By the midday break, it was down 84 yuan, or 2.3 percent, at 3,559 yuan.
The fall in Shanghai rebar followed a 70 yuan per tonne decline in the price of steel billet in China's key Tangshan area over the weekend, Wang said.
Sellers in China of iron ore cargoes from top suppliers Australia and Brazil cut price offers by $1 per tonne on Monday, according to Chinese consultancy Umetal, reflecting concern appetite for the steelmaking ingredient may slip along with softer steel prices.
A modest revival in China's steel demand has supported a recovery in iron ore prices from three-year lows below $87 a tonne touched in early September, although the still fragile demand has also capped price gains in both steel and iron ore.
Benchmark iron ore with 62 percent iron ore content <.IO62-CNI=SI> was unchanged at $122.80 a tonne on Friday, based on data from information provider the Steel Index.
Restocking by steel mills on hopes China's new leadership will maintain infrastructure spending had pushed up iron ore prices to their highest since July last week.
But traders had warned the winter season would eventually dampen demand as construction normally slows during the period.
We haven't purchased iron ore over the past three weeks, and steel mills are still keeping their inventories at low levels, a Shanghai-based iron ore trader said.
We expect there will still be some buying this week, but we won't see large-scale restocking.
The next large-scale restocking may happen just before the Lunar New Year holiday in February, traders said, although the magnitude may not equal recent years as China's economic growth shifts to slower gear.
Home prices in China steadied in October from September, adding to evidence of a mild recovery in the country's property market, data showed on Sunday.
Although home prices still fell 1.1 percent annually for the eighth straight month of decline since March, reflecting continuing curbs in the sector.
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