Steel and iron ore fell in price amid weak demand in China

Construction steel futures in China fell on Wednesday as investors remained wary of post-weekend demand from downstream users.

Following the Lunar New Year holiday earlier this month, construction sites and manufacturing plants usually resume work this week.

“Major markets in China have not fully resumed (spot) trading and steel prices are hovering at low levels in most regions,” analysts from Galaxy Futures said.

As of 0202 GMT, rebar prices in Shanghai fell 2.3 percent to 3,590 yuan ($ 533.81) a tonne.

Hot rolled steel, long products production, fell 1.8 percent to 3,590 yuan.

“Steel production is highly likely to increase after the holiday ... And the market focus will shift to increasing demand from downstream users,” said analysts at Jinrui Futures.

Falling steel prices also weighed on iron ore futures as the market questioned whether mills would delay restocking until steel sales pick up.

Official data released last week showed China's PPI rose 0.1 percent in January from a year earlier, raising concerns that the world's second largest economy could return to deflation as it cools. domestic demand.

Dalian iron ore futures completed a three-day winning streak on Wednesday, dropping nearly 3% to 616 yuan a tonne.

Coke futures, however, rose 0.1 percent to 2,072 yuan a tonne, fueled by concerns about limited supplies to the coal mining hub of Shanxi province.

The largest coke plant, Shanxi Coking Co Ltd, said on Tuesday that it expects to cut coke production by about 220,000 tonnes due to environmental restrictions imposed by the local government from February 16 to March 31.

At the end of February, there was a forecast for smog in the northern region of China.

China's leading steel province, Hebei, issued an orange contamination warning last week starting February 17, which could last until around February 22. Orange alerts require industrial companies to cut production by at least 30 percent.