Chinese steel, iron ore jump from multi-week lows

Steel and iron ore futures in China jumped more than 3 percent on Wednesday to pull away from multi-week lows that both commodities touched this week, but traders predict further price declines as supply outpaces demand in the world's top market. The most-active rebar on the Shanghai Futures Exchange closed up 3.2 percent at 3,169 yuan ($460) a tonne, just off a session high of 3,177 yuan.
The construction steel product hit 3,003 yuan on Monday, its weakest since February 10. Iron ore for September delivery on the Dalian Commodity Exchange rose 3.5 percent to end at 571 yuan per tonne, after rising as far as 574 yuan. The contract on Monday touched its lowest since January 10 at 541 yuan.
But prospective buyers of iron ore in China are holding back following the recent price slide that took spot prices of the steelmaking raw material to a seven-week trough of $81.57 a tonne on Monday. "Every time the price starts to drop, buying interest would shrink," said a Shanghai-based iron ore trader. There's plenty of cargoes being offered in the market as sellers rush to liquidate their shipments before prices drop further, he said.
Stockpiles of imported iron ore at China's ports continued to rise last week, reaching 132.45 million tonnes as of March 24, according to SteelHome consultancy. That is the highest level of port inventory since SteelHome began tracking the data in 2004. Iron ore for delivery to China's Qingdao port gained 0.5 percent to $82.01 a tonne on Tuesday, after a two-day drop, according to Metal Bulletin.
The spot benchmark touched a 30-month peak of $94.86 in February, but has lost 10 percent so far in March and is on track for its first monthly drop in six. Buying interest for steel products among traders has similarly eased, the Shanghai trader said. "In the last few weeks a lot of traders were buying steel and hoping the price would go up. Now they're taking losses as the price drops and the buying interest is gone."