China rebar, iron ore extend losses on weak demand outlook
* Tepid economic outlook weigh on demand for steel, iron ore
* Big steelmakers reported $756 mln of losses in Jan-Feb
* Mills ask for discount to buy iron ore
SHANGHAI, April 15 (Reuters) - Chinese steel and iron ore
futures extended losses on Tuesday, weighed down by a tepid
pick-up in demand for the two commodities in the world's top
consumer.
Demand for metals traditionally improves in the second
quarter as construction and manufacturing activity firms, but a
sluggish recovery in China and the lack of any major economuc
stimulus by Beijing is expected to pressure commodity prices.
"The general market sentiment remains weak amid gloomy
expectations for first-quarter economic growth, which keeps
denting steel demand and prices," said Xia Junyan, an analyst
with Wanda Futures in Shanghai.
"I don't expect any big improvement in steel prices in the
near future."
The most-traded rebar for October delivery on the Shanghai
Futures Exchange edged down 0.3 percent to 3,358 yuan a
tonne by the midday break. It earlier touched 3,336 yuan, its
lowest price in more than one week.
China's major steel companies lost 4.7 billion yuan ($755.74
million) in the first two months of the year, compared with a
profit of 5.1 billion yuan in the same period last year, local
media reported on Monday, citing data from the China Iron &
Steel Association.
Shrinking profit margins and falling steel prices are
forcing Chinese steelmakers, which produce about half of the
world's steel output, to curb purchases of iron ore.
"The market has been quiet since Monday afternoon, and
everyone is watching closely for the upcoming economic data in
order to find clues for the market trend," said an iron ore
trader in Beijing.
"Demand is still there, but steel mills are bargaining a lot
and offering very low prices for cargoes."
China's gross domestic product likely grew 7.3 percent in
the first quarter, the slowest pace in five years, according to
economists polled by Reuters, ahead of the data to be released
on Wednesday.
Iron ore for delivery in September on the Dalian Commodity
Exchange fell for a fourth day in a row, down 0.25
percent to 803 yuan a tonne by midday break.
Iron ore for immediate delivery to China
stood little changed at $117 a tonne on Monday, after falling
nearly 2 percent to $116.90 a tonne on Friday, according to data
compiler Steel Index.
Global miner Rio Tinto (Xetra: 855018 - news) said its
first-quarter iron ore shipments fell 8 percent from the
previous quarter due to weather-related disruptions in Australia
and Canada, but shipments were still up 16 percent from a year
ago.
Rio miner said it would still meet full-year production
target of 295 million tonnes to meet growing demand from China.
Shanghai rebar futures and iron ore indexes at 0433 GMT
Contract Last Change Pct Change
SHFE REBAR OCT4 3358 -11.00 -0.33
DALIAN IRON ORE DCE DCIO SEP4 803 -2.00 -0.25
THE STEEL INDEX 62 PCT INDEX 117 +0.10 +0.09
METAL BULLETIN INDEX 117.74 +0.37 +0.32
Dalian iron ore and Shanghai rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
($1 = 6.2191 Chinese Yuan)
(Reporting by Ruby Lian and Fayen Wong; Editing by Richard
Pullin)