Chinese iron ore futures fell to their weakest level in almost a month on Monday, dropping for a fifth session along with steel prices as investors pared positions in the two commodities although the outlook for demand remained bright. The losses were in line with a retreat in other China-traded commodities, with rubber sliding nearly 3 percent and nickel down almost 4 percent.
The most-active iron ore on the Dalian Commodity Exchange fell as far as 519 yuan ($80) a tonne, the lowest since August 16. The contract cut losses to close at 533.50 yuan, down 2.2 percent. Iron ore demand in China, the world's top importer of the steelmaking commodity, remains firm particularly for high-grade material, said a Shanghai-based trader.
"Mills are looking for high-grade (iron ore) and they're willing to pay the market level," he said. "I think the futures market is not impacting the physical market." Futures prices have been in a range between 500 yuan and 600 yuan, he said, adding that only a drop below 500 yuan could fuel a more sustained decline in prices.
Reflecting firm appetite for the raw material, stocks of iron ore at China's ports dropped for a sixth straight week to 133 million tonnes on Friday, according to SteelHome consultancy. That was the lowest inventory at the ports since early May. The most-traded rebar on the Shanghai Futures Exchange eased 1.2 percent to end at 3,915 yuan a tonne, but also off the session's low of 3,835 yuan. As with iron ore futures, Monday marked the fifth straight session of losses for the construction steel product which touched 4,194 yuan on September 4, its loftiest since February 2013.