China steelmaking raw materials drop amid weak demand

Weekly steel production at China's major steel firms stood at 8.9 million tonnes last week, down 2.5% from a week earlier, according to data from Mysteel consultancy

Chinese steelmaking raw materials dropped on Monday amid weak demand, with coking coal and coke prices tumbling more than 4%, while benchmark iron ore futures declined after logging gains last week.

Weekly steel production at China's major steel firms stood at 8.9 million tonnes last week, down 2.5% from a week earlier, according to data from Mysteel consultancy.

Average daily molten iron output remained at historical lows, however, coke inventories at mills are higher than the same period in previous years, analysts with SinoSteel Futures wrote in a note.

With the crude steel production control policy likely to be continued in the mid- and long-term, coking coal prices have further room to decline and coke demand will be hard to recover to high levels, SinoSteel Futures said.

The most actively traded coking coal futures on the Dalian Commodity Exchange for May delivery dropped 4.8% to 2,177 yuan ($341.68) a tonne before closing down 4.2% at 2,190 yuan ($343.64) per tonne.

Coke futures on the Dalian exchange finished down 6.2% at 2,936 yuan ($4460.70) a tonne. They lost 6.8% earlier in the session.

Benchmark iron ore dropped 3.3% to 683 yuan ($107.17) per tonne, reversing the gains in both the futures and the spot market last Friday. Spot prices of 62% iron ore for delivery to China rose $2.5 to $127.5 a tonne on Friday, according to SteelHome consultancy.

Steel prices on the Shanghai Futures Exchange were mixed.

Steel rebar for construction use shed 4.6% to 4,307 yuan ($675.83) a tonne and hot rolled coils futures lost 4.5% to 4,413 yuan ($692.46) per tonne.

Shanghai stainless steel futures, for February delivery, edged up 0.1% to 16,720 yuan ($2623.61) a tonne.