Steel, iron ore futures losses deepen on weak demand

Losses in steel and iron ore futures in China deepened on Wednesday over worries of the widening trade spat between China and the US, although modest compared with the previous session’s slide.

Slower construction demand in China, the world’s top steel consumer and producer, also weighed on steel prices, with iron ore futures trading near a two-month low.

The most-active October rebar on the Shanghai Futures Exchange was down 2.9 percent on Tuesday.

The most-traded September iron ore on the Dalian Commodity Exchange fell 0.8 percent to 451.50 yuan ($69.77) per tonne, adding to a 4.6 percent drop in the prior session when it touched a two-month trough of 443.50 yuan.

Worries that a growing trade row between China and the US could hurt the Chinese economy fueled a selloff in risky assets, with steel and iron ore futures among the hardest hit.

Trump threatened on Monday to hit $200 billion worth of Chinese imports with 10 percent tariffs.

The widened coverage of the US tariffs that could include steel-made products in China would affect Chinese steel demand, said Kevin Bai, an analyst at CRU consultancy in Beijing.

“Prices may be quite volatile in the short-term, but relatively in the long-term may face some downside risk,” he said.

That is partly because Chinese steel demand is seeing some weakness, with the hot weather in the northern part of the country and rains in the south hampering construction activity, said Bai.