Iron ore and steel futures in China pulled back further on Thursday after recent sharp gains that lifted both commodities to a multi-week high.
Steel demand was slower following the recent spike in prices and there was no rush from Chinese mills to buy iron ore cargoes given plentiful stocks at home, traders said.
The most-active rebar, a construction steel product, on the Shanghai Futures Exchange closed down 1.7 percent at 2,453 yuan ($370) a tonne, after touching a two-week high of 2,529 yuan on Tuesday.
On the Dalian Commodity Exchange, the most-traded September iron ore fell 1.9 percent to 473.50 yuan a tonne. The contract reached 489 yuan on Tuesday, the highest since April 25.
“We have seen mills looking for cargo, but we did not see any rush in buying,” said an iron ore trader in Shanghai.
Weaker futures could deflate bids for physical iron ore cargoes and push the spot benchmark back below $60 a tonne, traders said.
Iron ore for delivery to China’s Tianjin port was unchanged at $60.70 a tonne on Wednesday, according to The Steel Index (TSI). It was the highest level for iron ore since May 4.
“Weaker steel prices in China weighed on iron ore, with physical traders sitting on the sidelines,” TSI said.
Iron ore stocks at Chinese ports stood at 106.05 million tonnes on July 29, the highest since December 2014, according to data tracked by SteelHome consultancy. SH-TOT-IRONINV
Brazil’s Vale SA, the world’s top iron ore producer, is considering raising as much as $10 billion from the sale of up to 3 percent of future iron ore output to undisclosed Chinese companies, two sources with direct knowledge of the matter said.
The deal, along with a series of planned asset sales, could help Chief Executive Officer Murilo Ferreira reach his goal of reducing Vale’s $27.5 billion net debt by a third over the next 18 months.
Source: ReutersPrevious Next