MANILA, May 31: Chinese iron ore futures edged higher on Tuesday and steel steadied but both were set to end May with their deepest monthly losses on record as seasonal demand in the top global steel consumer fizzles. May’s decline follows a spectacular rally over December to April that was fuelled by optimism about China’s economy. But the bullish sentiment turned into doubts as indicators from retail sales to trade suggested a solid recovery was not yet in place. The five-month price surge pushed many shuttered Chinese steel mills to resume operations, increasing supply that could keep steel markets under pressure as seasonal demand slows down with hot weather curbing construction activity from June. These mills “just don’t start and stop with the flows of seasonal demand,” said Daniel Hynes, senior commodity strategist at ANZ Bank. “We’d expect those to remain open for the time being and that probably should result in steel production holding up relatively well despite that normal seasonal slowdown.” The most-traded rebar on the Shanghai Futures Exchange was little changed at 1,995 yuan $303 a tonne by the midday break. Rebar, or reinforcing bar used in construction, has fallen 28 percent from its April peak. For the month, it has lost 22 percent so far, the most since the Shanghai exchange launched rebar futures in 2009. On the Dalian Commodity Exchange, the most-active iron ore gained 1 percent to 346.50 yuan a tonne. The contract is now down 31 percent from April’s high and 24 percent over May, its biggest monthly decline since launch in 2013. Stocks of imported iron ore at China’s major ports have continued to rise, standing at 100.65 million tonnes on May 27, the highest since December 2014, according to data tracked by industry consultancy SteelHome. With Chinese steel production holding up, ANZ’s Hynes said he doesn’t expect the iron ore port inventory to rise sharply from current levels. Spot iron ore could find strong support at around $50 a tonne, he said. Iron ore for immediate delivery to China’s Tianjin port < .IO62-CNI=SI > slipped 1.2 percent to $50.30 a tonne on Monday, data compiled by The Steel Index showed. The spot benchmark has lost almost 23 percent so far in May, its biggest monthly drop since August 2012. Other steelmaking raw materials coking coal and coke on Tuesday recovered from recent lows, rising 1.3 percent and 1.9 percent, respectively (AGENCIES)
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