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BEIJING: Iron ore futures prices languished on Thursday, with lingering concerns over demand in top consumer China acting as a headwind, although Beijing’s latest pledge of equipment upgrades capped losses.

The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) ended morning trade 1.22% lower at 809.5 yuan ($112.57) a metric ton, posting a fall of 16% since the end of Lunar New Year holiday break. The benchmark April iron ore on the Singapore Exchange was 0.85% lower at $104.65 a ton, as of 0335 GMT.

Market participants are closely monitoring possible signs for a turnaround with eyes on hot metal output change, said analysts. “Hot metal output still hovered at a low level suppressed by low steel margins and bearish expectations,” analysts at Huatai Futures said in a note.

It is not easy to see ore prices fall below $100 a ton in the short run as mills’ in-plant inventories are low and the downstream sectors still have needs for restocking, analysts at First Futures said in a note.

The pace at which prices fell slowed, however, partly due to China’s latest move to prop up its sputtering economy. China’s cabinet on Wednesday issued details of its plan to promote large-scale equipment upgrades and sales of consumer goods.

“This is undoubtedly good for the market as it could offset some demand reduction from the construction area, but it still depends on the actual implementation of the policy to see the actual impact,” said Kevin Bai, a Beijing-based analyst at consultancy CRU Group. Other steelmaking ingredients on the DCE posted further losses, with coking coal and coke down 3.7% and 1.72%, respectively.

Steel benchmarks on the Shanghai Futures Exchange were broadly weaker. Rebar fell 2.05%, hot-rolled coil lost 1.84%, wire rod shed 0.54% and stainless steel slid 1.42%. “Construction steel is the largest drag for the whole ferrous market,” Huatai analysts added.

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