The most-traded iron ore on the Dalian Commodity Exchange closed down 1.9 percent at 580.50 yuan ($84) a tonne after falling to 577 yuan, its lowest since January 10. Iron ore tumbled nearly 16 percent on Wednesday, extending losses in overnight trading, as the most-active contract rolled over to September.
Heavy selling in iron ore futures was driven by concerns over weaker demand, ANZ analysts said in a note. "However, with steel production expected to lift in coming months and disruptions to exports from Australia in recent weeks, we expect this selloff to be relatively limited," they said.
The most-active rebar on the Shanghai Futures Exchange slid 1.3 percent to end at 3,127 yuan per tonne, not far above a session trough of 3,118 yuan. Iron ore's rally this year was spurred by the surge in Chinese steel prices on hopes of stronger construction demand, along with Beijing's efforts to curb excess steel capacity. A retreat in steel prices consequently pulled down iron ore as market focus switched back to high inventory of the steelmaking ingredient in China. Iron ore stocked at China's major ports reached 131 million tonnes on Friday, the highest since at least 2004, according to SteelHome consultancy. Iron ore for delivery to China's Qingdao port fell 3 percent to $84.99 a tonne on Wednesday, its weakest since February 9, according to Metal Bulletin.
Copyright Reuters, 2017