Chinese steel futures fell to a five-week low on Wednesday after a brief rebound in the previous session, weighed down by expected slowing demand in the winter months.
Steel demand in northern China typically weakens in November and December as cold temperatures hamper construction. Tighter credit and slower steel production have also hurt demand for raw material iron ore.
The most-traded May rebar futures contract on the Shanghai Futures Exchange dropped to a session low of 3,592 yuan ($590) a tonne, the lowest since Nov. 19. It traded 0.55 percent lower at 3,603 yuan by the close.
"Demand is weakening during upcoming holidays and traders are not keen to restock, so the domestic steel market is expected to post a modest downward trend in January," according to a report published on the China Iron & Steel Association's website on Wednesday.
On the Dalian Commodity Exchange, iron ore futures for May settlement traded slightly higher at 903 yuan by close, up 0.22 percent from Tuesday.
Benchmark 62 percent grade iron ore for immediate delivery into China <.IO62-CNI=SI> edged up on Tuesday, after falling for nine straight sessions, according to data compiler Steel Index.
It edged up to $132 a tonne compared with $131.90 a tonne on Monday, the lowest since Oct. 31.
Shanghai rebar futures and iron ore indexes at 0703 GMT
Contract Last Change Pct Change
SHFE REBAR MAY4 3603 -20.00 -0.55
DALIAN IRON ORE MAY4 903 +2.00 +0.22
THE STEEL INDEX 62 PCT INDEX 132 +0.10 +0.08
METAL BULLETIN INDEX 132.49 -0.45 -0.34
Dalian iron ore and Shanghai rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading
day
($1 = 6.0714 Chinese yuan)
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