Chinese iron ore futures tumbled nearly 6 percent and steel prices dropped to the lowest in almost five months on Monday as worries over weaker steel demand sustained a selloff, with raw materials coking coal and coal also down sharply. Steel traders are not replenishing stockpiles on concerns demand in the world's top producer and consumer could remain weak after the seasonally soft winter season, with the Chinese economy cooling further amid an ongoing trade war with the United States.
The most actively trade rebar on the Shanghai Futures Exchange, for January delivery, fell as much as 3.2 percent to 3,576 yuan ($515) a tonne, the weakest since July 6. The construction steel product was down 2.6 percent at 3,599 yuan by 0158 GMT.
Rebar stocks at Chinese traders dropped to 3.08 million tonnes in mid-November, the lowest level this year, according to data tracked by SteelHome.
The falling stockpiles show traders are not restocking steel, said a Shanghai-based trader.
"Traders are trying to sell out all their stocks or not buy any new stocks because demand is getting weaker," he said.
Steel demand is typically slow during winter as the cold weather halts construction projects. The concern among many is consumption may not recover strongly with China's economy under pressure from faltering consumer spending and property sales and Chinese exports to the United States expected to slide soon as higher US duties start to bite.
Iron ore was the hardest hit among steelmaking raw materials. The most-traded January iron ore on the Dalian Commodity Exchange slid by its downside limit of nearly 6 percent to mark 477.50 yuan a tonne, the lowest since August 30. Stocks of iron ore at China's major ports rose 350,000 tonnes from the previous week to 140.95 million tonnes on November 23, SteelHome data showed.