China's iron ore and other steelmaking raw materials slipped for a second session on Thursday, while analysts said they expect softer demand in the coming months as the country shifts its focus from heavy industries to services. The most-active iron ore futures on the Dalian Commodity exchange pared early losses to close 0.3 percent lower at 483 yuan ($75.89) a tonne.
"The market is full of uncertainties including weather and environmental policies. People are waiting for news for instance, lower inventory at ports or higher utilisation rate at mills," said Wang Yilin, an analyst at Sinosteel Futures. Stockpiles of iron ore at Chinese ports stayed little changed last week as of May 11, hovering near record level at 160 million tonnes.
Analysts at BMI Research on Thursday revised their outlook for the iron ore. They now expect prices to fall in the coming months and subsequent years as China shifts its focus to services, dampening the demand for iron ore. Meanwhile, around half of China's steelmaking capacity is expected to comply with ultra-low emission standards by 2020. Mills will need to install expensive environmental equipments and use higher grade of raw materials to reach the targets.
Other steelmaking raw materials also fell in early trade. Coking coal for September delivery lost 1.9 percent to 1,247.5 yuan a tonne after plunging as much as 2.3 percent earlier in the session. Coke futures slipped 0.3 percent to 2,106.5 yuan a tonne. Construction steel rebar prices climbed 0.1 percent to 3,679 yuan a tonne by the afternoon session.
Physical steel products settled less than 0.1 percent higher at 4,313.08 yuan a tonne on Wednesday, according to data from Mysteel consultancy.