Shanghai rebar falls over 1 pct on demand woes, Dalian ore hits record low
* China steel consumption shrank 7.5 in Jan-Feb – CISA
* Iron ore not far above record low at below $56/tonne
* Rio Tinto dismisses Fortescue’s call for output cap (Adds Rio Tinto, updates prices)
By Manolo Serapio Jr
SINGAPORE, March 26 (Reuters) – Chinese steel futures fell more than 1 percent on Thursday, pulling further away from a three-week top, on worries a slowing economy would further curb demand in the world’s top consumer.
China’s apparent crude steel consumption dropped 7.5 percent in the first two months of the year with large producers incurring losses, said Wang Liqun, vice chairman of the China Iron and Steel Association.
Steel prices rose earlier in the week on expectations that mill shutdowns arising from China’s tighter environmental standards would crimp supply in a glut-hit market.
“There should be some support to the market because the supply side is under control. But it seems that overall underlying demand is not very strong,” said Helen Lau, analyst at Argonaut Securities (Asia) Ltd in Hong Kong.
China’s factory activity fell to an 11-month low in March as new orders shrank, a private survey showed this week, suggesting sustained weakness in the world’s second-largest economy that is forecast to grow this year at its slowest pace since 1990.
The most-active October rebar contract on the Shanghai Futures Exchange closed down 1.4 percent at 2,491 yuan ($401) a tonne.
It touched a session low of 2,488 yuan, down more than 3 percent from a three-week peak on Tuesday.
Spot steel prices in China also retreated after sharp gains earlier in the week, traders said.
In iron ore, the September contract on the Dalian Commodity Exchange fell 2.1 percent to end at 428 yuan per tonne, after hitting a record low of 426 yuan.
Buying interest for spot iron ore cargoes was limited amid expectations prices could slip further in an oversupplied market, although some traders were looking at securing material after staying away for months.
“We are trying to purchase this week at a fixed price. We don’t have any stocks and the last time we bought was in November,” said an iron ore trader in China’s eastern Shandong province.
Iron ore for immediate delivery to China’s Tianjin port .IO62-CNI=SI was off 0.2 percent at $55.50 a tonne on Wednesday, according to the Steel Index (TSI).
The spot benchmark hit $54.20 on Monday, its lowest since TSI began compiling prices in late 2008.
The head of Rio Tinto, the world’s second-largest iron ore miner dismissed as “harebrained” a suggestion by smaller rival Fortescue Metals Group that miners should cap output of the commodity to boost prices.
Rebar and iron ore prices at 0708 GMT Contract Last Change Pct Change SHFE REBAR OCT5 2491 -35.00 -1.39 DALIAN IRON ORE DCE DCIO SEP5 428 -9.00 -2.06 SGX IRON ORE FUTURES APR 54 -0.34 -0.63 THE STEEL INDEX 62 PCT INDEX 55.5 -0.10 -0.18 METAL BULLETIN INDEX 55.81 -0.05 -0.09 Dalian iron ore and Shanghai rebar in yuan/tonne Index in dollars/tonne, show close for the previous trading day
($1 = 6.2140 Chinese yuan) (Editing by Himani Sarkar)