Steel reinforcement-bar futures headed for a weekly loss as the price of iron ore, the main ingredient in steelmaking, fell to the lowest in five months. Rebar for delivery in October on the Shanghai Futures Exchange fell as much as 0.6 percent to 3,529 ($575) a metric ton and was at 3,531 at 10:15 a.m. local time.
Futures have declined 3 percent this week, the most since the week ended April 19.
Ore with 62 percent iron content at the port of Tianjin fell 1.1 percent to $125 a dry ton yesterday, according to The Steel Index Ltd. “The view that iron ore prices will continue to decline is becoming more convincing, which leads to expectations for lower steel-products prices in the second half of 2013,” Zhang Lei, analyst at Nanhua Futures Co., said by phone from Shenyang today.
Iron-ore prices extended losses for a fifth day yesterday as weak Chinese demand fueled concern that they are drawing on stockpiles rather than purchasing shipments for the raw material, according to Macquarie Research.
Ore stockpiles at Chinese ports are at a record low, and those at small steel mills fell to 20 days of use, Macquarie said in an e-mailed report today. Declining steel prices are squeezing mills’ margins, and June maintenance will probably lead prices lower before July, while supplies will also expand in the second half of the year, according to the report.