BEIJING: Iron ore futures in China fell on Monday, retreating from a more than eight-month peak hit in the previous session, as demand for the steelmaking ingredient softened due to the monsoon season.
The most actively traded iron ore futures on the Dalian Commodity Exchange, for September delivery closed down 2.2% at 754 yuan.
The drop came as fewer blast furnaces at mills were put into production last week. Capacity utilisation rates at 247 mills across China fell to 91.54% from 92.35%, according to consultancy Mysteel.
Easing demand has also pushed up portside inventories of iron ore, which rose for the first time in 10 weeks to 108.35 million tonnes last week, data compiled by SteelHome consultancy showed.
"Actual shipments into China continue to pick up in the short-term which would add further downward pressure to prices," broker Marex Spectron wrote in a note.
Construction steel rebar on the Shanghai Futures Exchange , for October delivery, edged 0.3% lower to 3,620 yuan a tonne. Hot-rolled coils, used in the manufacturing sector, ended down 0.4% to 3,631 yuan a tonne.
Dalian coking coal fell 1.0% to 1,177 yuan a tonne and coke dropped 0.4% to 1,954 yuan a tonne. Shanghai stainless steel futures, for August delivery, rose 0.8% to 13,205 yuan a tonne.
Spot prices of iron ore with 62% iron content for delivery to China rose to $104 per tonne on Friday. Baowu Group, China's biggest steel producer, plans to invest in the Simandou iron ore mine in Guinea and develop the deposit with other steelmakers.
Behind the boom in China's steel output since March is a tale of two diverging sectors that highlight the limits of what policymakers can do to revive the coronavirus-hit economy, said analysts.