SINGAPORE, Nov 11: Shanghai steel futures dropped to one-week lows on Monday amid concern fresh efforts in China to curb property purchases may dent demand for the building material.
Shanghai will raise the minimum downpayment for second-home purchases to 70 percent from 60 percent, the city’s housing bureau said on Friday, following similar moves by other big cities in China.
Home prices in large Chinese cities have set records, despite a four-year government campaign to cool the property market, raising worries over a potential price bubble.
The most-traded rebar contract for May delivery on the Shanghai Futures Exchange was down half a percent at 3,651 yuan ($600) a tonne by the midday break, after touching a low of 3,633 yuan, its weakest since Nov. 1.
‘The restriction will be negative for steel demand and I heard that most of the buyers have already been done with restocking,’ an iron ore trader in Shanghai said.
China’s iron ore futures were similarly lower, with Dalian prices also touching their weakest level since Nov. 1.
The most-active May iron ore contract on the Dalian Commodity Exchange was off 0.2 percent at 938 yuan a tonne, after falling to as low as 934 yuan.
Data over the weekend that showed China’s industrial output rising 10.3 percent in October from a year earlier, faster than market expectations of 10 percent, failed to lift steel and iron ore prices.
Market participants are more keen on any policy signals that would emerge from the Communist Party meeting in China which began on Saturday and ends on Tuesday, traders said.
President Xi Jinping and Premier Li Keqiang must unleash new growth drivers as the world’s second-largest economy loses steam, burdened by industrial overcapacity, piles of debt and soaring house prices.
Appetite for spot iron ore cargoes may be limited this week, traders said, after Chinese buyers snapped some shipments last week.
Iron ore for immediate delivery in China’s Tianjin port slipped 0.7 percent to $135.90 a tonne on Friday, according to data provider Steel Index. The price reached a two-month peak of $137.10 on Nov. 6.
‘Fundamentals may not support the price to stand above $135. There’s no shortage of cargo in the market and mills are not hungry for material at the moment,’ said another trader in Shanghai.
(agencies)
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