RIO rio tinto limited

News: RIO UPDATE 1-Shanghai steel slips after 7-day rally, iron ore drops 2.6 pct

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    • Expected winter production cuts had lifted steel prices
    • Tighter supply ahead amid solid Chinese steel demand -analyst
    • China iron ore imports drop to 86.25 mln T in July

    (Adds China data, ANZ comment; updates prices)

    Chinese rebar steel futures dropped marginally on Tuesday as investors locked in some gains after a seven-day rally that lifted prices to the highest level since 2013 ahead of production curbs in winter.

    But analysts said the planned output curbs of up to 50 percent should tighten supply in the world's largest steel producer and underpin prices.

    The most-active rebar on the Shanghai Futures Exchange SRBcv1 closed down 0.6 percent at 3,884 yuan ($579) a tonne. The construction steel product touched a session-high of 3,996 yuan, near Monday's peak of 4,013 yuan, which was its loftiest since March 2013, before retreating.

    China earlier this year ordered steel and aluminium producers in 28 cities to slash output in winter as it fights smog. Last week, the key steel-producing area of Tangshan and other parts of Hebei province said they would implement the order, cutting production by up to 50 percent.

    "We will not be surprised if another major steel-producing province is to announce its production cuts plan for winter," said Argonaut Securities analyst Helen Lau. "Therefore, this really points to supply tightness ahead given China's overall demand is solid and growing, supported by solid economic fundamentals."

    Ahead of the winter cuts, Lau said crude steel output in Hebei dropped 0.2 percent in the first half of 2017. That compared to a 4.6-percent increase in all of China during the period.

    Raw material iron ore declined, with the most-traded iron ore contract for January delivery on the Dalian Commodity Exchange DCIOcv1 falling 2.6 percent to 549 yuan a tonne after Monday's 3-percent spike.

    Iron ore for delivery to China's Qingdao port <.IO62-CNO=MB> rose 2.8 percent to $76.17 a tonne on Monday, the strongest level since April 6, according to Metal Bulletin.

    China's iron ore imports fell 2.4 percent from a year ago to 86.25 million tonnes in July, customs data showed. That was also down from 94.7 million tonnes in June.

    It also marked the lowest volume of imports in three months, with ANZ commodity strategist Daniel Hynes saying it was most likely due to rail maintenance issues at the Western Australian operations of No. 2 iron ore miner Rio Tinto (RIO) "which led to disruptions to exports". ($1 = 6.7039 Chinese yuan)

 
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