SHANGHAI, Oct 24: Chinese iron ore futures fell for a third consecutive session on Wednesday, undermined by a lack of significant restocking by steel mills as the demand outlook remains soft.
Steel mills face falling orders in winter due to sluggish consumption in northern regions as the cold halts construction work.
‘Mills are having a very hard time and using all means to save costs by keeping iron ore inventories low and buying on a hand-to-mouth basis,’ said an iron ore trader in Beijing, adding that relatively low stock levels could prevent a sharp fall in prices.
The most active iron ore contract for May delivery on the Dalian Commodity Exchange dropped to a session low of 942 yuan ($150) a tonne, down 1.5 percent from Tuesday, the lowest since the listing of the contract on Friday.
This is equivalent to about $127 after stripping out the 17-percent value-added tax and other costs.
The benchmark spot price for seaborne iron ore <.IO62-CNI=SI> fell 0.8 percent to $133.3 a tonne for delivery to northern China’s Tianjin port on Tuesday, according to data provider the Steel Index.
‘Mills are struggling with tight cash flow and we are having big difficulty selling stockpiles and may have to take losses,’ said an iron ore trader in coastal Shandong province.
The most traded rebar contract for May settlement on the Shanghai Futures Exchange stood little changed at 3,638 yuan a tonne by the midday break. It earlier touched a near one-month high of 3,661 yuan, the highest since Sept.24.
(AGENCIES)
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