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Iron ore, coking coal skid again in China as demand concerns emerge
Reuters Reuters
Wednesday October 18, 2017 10:23 PM
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* Rebar, iron ore futures drop about 4 pct
* Coking coal, coke tumble 6 pct
* China Sept steel output up 5.3 pct y/y, but below record
By Manolo Serapio Jr
MANILA, Oct 19 (Reuters) - Prices of steelmaking commodities iron ore and coking coal fell sharply on Thursday, pressured by worries over slower demand as Chinese mills curb output in line with Beijing's campaign to fight smog.
Iron ore futures slid more than 4 percent and coking coal dropped more than 5 percent. Rebar steel futures tumbled over 4 percent as data showed China's steel output rose year-on-year in September, though below the monthly record reached in August.
Mills in the northern part of China are expected to cut output by up to half during winter, or four months from mid-November, on government orders to limit pollution. Some cities, however, have already implemented the steel output curbs, including the top steelmaking city of Tangshan. The most-traded iron ore contract for January delivery on the Dalian Commodity Exchange was down 4.4 percent at 439.50 yuan ($66) a tonne by 0210 GMT, after falling as far as 437 yuan.
"We are getting less orders especially from the northern steel mills," said a Beijing-based iron ore trader. "But our cargoes are mainstream so liquidity is still okay."
By mainstream, the trader meant her company sells high-quality Australian iron ore which are mostly preferred by mills across China as it boosts productivity at their plants and can reduce emissions as less coke is used in the production process.
Still, overall iron ore consumption in China could drop by 77.65 million tonnes if all 28 cities covered by the restrictions cut production by half, Cao Ying, analyst at SDIC Essence Futures, has estimated. That represents almost 8 percent of China's 2016 imports.
Coking coal futures slumped 5.5 percent to 1,108.50 yuan per tonne and coke was last down 6 percent at 1,705 yuan, after earlier hitting a 3-1/2-week low of 1,696.50 yuan.
The most-active rebar on the Shanghai Futures Exchange fell 4.1 percent to 3,579 yuan a tonne.
China's crude steel output rose 5.3 percent from a year earlier to 71.83 million tonnes in September, but below a record 74.59 million tonnes in August, government data showed. ($1 = 6.6340 Chinese yuan)
(Reporting by Manolo Serapio Jr.; Editing by Gopakumar Warrier)