China iron ore falls amid restock rally concerns
Source: www.chinamining.org Citation: Reuters Date: Aug.3, 2017
Iron ore futures in China retreated on Wednesday after a three-day rise pushed prices to their highest in more than four months amid doubts a restocking-driven rally would be sustainable.
Chinese steel producers, the world`s top buyer of iron ore, had been boosting stocks of the raw material to increase output in anticipation of demand picking up after the summer lull, but this could leave them with too much iron ore later this year.
The boost has lifted spot iron prices this week to their strongest level since April at above $70 a ton, although analysts at Barclays think this may be difficult to sustain by saying that a drop to "the mid-to-low $50 per ton handle by the fourth quarter is increasingly likely."
"Even if we assume demand conditions remain supportive, we see the price outlook as still under downward pressure," Barclays said in a note.
The most-active iron ore futures on the Dalian Commodity Exchange was down 0.82 percent at 544 yuan ($80.9) a ton during the afternoon trading, after touching a low of 532 yuan.
The contract rose to 582 yuan on Tuesday, its highest since March 24.
Spot iron ore prices already pared some gains on Tuesday, with the benchmark slipping 0.2 percent to $73.56 a ton, according to price reporting agency Metal Bulletin.
The prices hit $73.70 on Monday, its loftiest since April 11.
But investment bank ANZ said firmer Chinese steel prices should "keep upward pressure on raw material prices in the short term."
The most-active rebar on the Shanghai Futures Exchange was last up 0.6 percent at 3,739 yuan per ton.
The construction steel product rose to 3,759 yuan on Tuesday, its highest level since September 2013.
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