Steel tumbles

MANILA: Chinese prices of steel and its raw materials iron ore and coking coal slid to multi-week lows on Friday and were set to post their steepest weekly losses in months, pressured by slower demand and S&P´s downgrade of China´s credit rating.

A selloff in steel futures spilled over to prices of its raw materials, pulling back further after this year´s sharp rally largely fueled by China´s supply-side reform aimed at cutting overcapacity.

The most-active rebar contract on the Shanghai Futures Exchange was down 2.9 percent at 3,614 yuan ($549) a tonne by 0217 GMT, after earlier hitting its weakest since Aug. 3 at 3,594 yuan.

The construction steel product has fallen more than 5 percent this week, on course for its biggest such drop since late March.

The most-traded iron ore contract on the Dalian Commodity Exchange fell as far as 464.50 yuan per tonne, the lowest since July 17. It has lost 7.5 percent so far this week, its biggest such drop since early May. "Demand for iron ore is expected to weaken in winter because steel factories will cut production and iron ore supply will rise as global miners produce more during the last quarter of the year," said a trader in Jinan in China´s eastern Shandong province. China has ordered mills in its main producing areas including the northern Hebei province to reduce output by up to half during winter to improve air quality.

Iron ore for delivery to China´s Qingdao port tumbled 5.1 percent to $66.09 a tonne on Thursday, the lowest since July 14, according to Metal Bulletin.