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China steel, iron ore struggle to recover after curbs

service@ironoreteam.comWed Aug 16, 2017 10:20am GMT
Chinese steel and iron ore futures slipped for a fourth consecutive session on Wednesday as recent moves by the Shanghai exchange to increase trading charges kept the two commodities under pressure.
The China Iron and Steel Association last week put a surge in rebar steel futures down to speculative trading, prompting the Shanghai Futures Exchange to lift transaction fees and impose limits on intraday positions on some rebar futures contracts from this Tuesday.
That fueled a retreat in steel and iron ore prices from last Friday when the measures were announced.
The most-active rebar on the Shanghai Futures Exchange fell 1 percent to close at 3,707 yuan ($554) a tonne.
Iron ore on the Dalian Commodity Exchange eased 0.4 percent to 523.50 yuan a tonne. The steelmaking raw material fell as far as 518 yuan earlier, its weakest since July 31.
Expectations that Chinese steel mills in key producing areas such as Hebei province would cut output by up to 50 percent during winter, upon Beijing's orders to fight smog, spurred a rally in rebar futures last week, lifting prices to their strongest since 2013.
But data this week showing a slowdown in China's fixed-asset investment growth, particularly in property investment, suggested steel demand from the construction sector could soften, said Carsten Menke, analyst at Julius Baer.
"While the weakness of the July data should not be over-emphasized, it still fits our view of a moderate slowdown in China towards the end of this year," Menke said in a note.
"The construction sector should face further cyclical and seasonal headwinds, which should weigh on demand over the coming months," he said.
Iron ore for delivery to China's Qingdao port .IO62-CNO=MB dropped 1.4 percent to $73.68 a tonne on Tuesday, the lowest since Aug. 3, according to Metal Bulletin, slipping for a third straight day.
Coking coal outperformed other steelmaking futures on Wednesday, with the most-active contract on the Dalian Exchange climbing 4 percent to 1,358 yuan a tonne. Coke rose 1.1 percent to 2,119 yuan per tonne.
Meanwhile, Jinneng Co Ltd was ordered to shut its open-pit coal mines in the city of Jinzhong in Shanxi province following a deadly accident at one of its mines, state media reported. Shanxi is one of China's top producing coal regions.