BEIJING: China's steel and iron ore futures closed lower on Thursday, hurt by weather-driven demand concerns, but losses were capped as the world's second-largest economy returned to growth after a coronavirus-led slump.
The most-actively traded iron ore futures contract on the Dalian Commodity Exchange, for September delivery, ended down 0.8% to 827 yuan ($118.18) a tonne. "There will be high temperature after the rainy season, which could also restrain steel demand," CITIC Futures wrote in a note. Rains and summer heat typically slow construction activities, especially in the southern part of China.
So, despite hopes of demand picking up quickly after rains, it might be hard to see a V-shape recovery, CITIC added. Following the drop in raw material prices, steel rebar on the Shanghai Futures Exchange, for October delivery, fell 1.0% to 3,703 yuan per tonne. Hot-rolled coils, used in cars and home appliances, dropped 0.8% to 3,735 yuan a tonne.
China's economy returned to growth in the second-quarter, but domestic consumption and investment remained weak as the shock from the coronavirus crisis underscored the need for more policy support. The September contract of stainless steel futures on the Shanghai bourse fell 1.5% to 13,405 yuan a tonne.
Dalian coking coal closed at 1,202 yuan per tonne, unchanged from previous session. Coke inched up 0.1% to 1,902 yuan a tonne. China's daily crude steel output rose 2.4% in June from a month earlier, official data showed, setting a second straight monthly record.
Spot prices of iron ore with 62% iron content for delivery to China, meanwhile, rose for the second straight session to $112.5 per tonne on Wednesday, according to data compiled by SteelHome consultancy. Total net profits for enterprises owned by China's central government during the first six months of 2020 plunged 37.7% from a year earlier, the state assets regulator said.
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