Iron Ore, Rebar Futures Dive On China Demand Worries

Iron ore and rebar futures in top steel producer China tumbled on Wednesday, leading a selloff in ferrous commodities driven by persistent unease about debt-saddled Chinese property firms and an overall bearish demand outlook.
The most-traded January iron ore on China’s Dalian Commodity Exchange DCIOcv1 ended daytime trading 5.9% lower at 731 yuan ($113.32) a tonne, after a five-session rally.
On the Singapore Exchange, the steelmaking ingredient’s most-active November contract SZZFX1 shed 4.4% at $122.05 a tonne by 0716 GMT.
In Shanghai, the benchmark construction steel rebar contract SRBcv1 fell 4.7% to 5,421 yuan a tonne, after hitting 5,267 yuan earlier in the day, its lowest since Sept. 3.
Chinese property developers face payment deadlines before the end of the year, and with China Evergrande Group’s 3333.HK fate looking increasingly bleak, fears are mounting of a wider crisis in the sector that accounts for about a quarter of the domestic steel demand.
Already, Chinese iron ore demand has collapsed amid environment-related steel production controls, curbing imports which declined 3% in annual terms in January-September.
“In mid-to-late September, the number of blast furnace maintenance… showed an explosive increase,” Zhongzhou Futures analysts wrote in a note.
“Under the strict production restriction policy, it is doubtful whether the steel plants… can resume production on schedule in October.”
Steel mills in some 28 cities in northern China will have to cut production from Nov. 15 to March 15 next year, in order to clear the smog-blanketed sky in time for the Olympic Winter Games that will take place in February in Beijing and the neighbouring Hebei province.
Hot-rolled coil on the Shanghai Futures Exchange SHHCcv1 lost 1.7%, but stainless steel SHSScv1 gained 0.7%.
Dalian coking coal DJMcv1 added 0.6% and coke DCJcv1 jumped 2.7%, trimming gains after hitting record peaks earlier in the day as supply concerns eased with most coal mines in China’s flood-hit Shanxi province resuming operations.