Iron ore futures in China sank to their lowest in 10 weeks on August 21, extending losses along with coke, after mining giant BHP Group gave a downbeat outlook for steelmaking raw material prices.
The most-traded iron ore on the Dalian Commodity Exchange , for January 2020 delivery, fell as much as 5.2% in early trade to 584 yuan/t ($82.7/t), its weakest since June 10.
The most-active coke contract, also with January 2020 expiry, slumped as much as 2.8% to 1,927.5 yuan/t.
BHP, the world's biggest miner, has warned global economic headwinds, such as the US-China trade war, could hit demand for its key commodities, including iron ore.
BHP expects average benchmark prices for steelmaking raw materials to be lower in financial year 2020 versus 2019, although it said prices are likely to remain above long-run marginal cost amid global supply disruptions.
Reduced iron ore shipments to China after a tailings dam disaster in Brazil in January and a cyclone in Australia, while Chinese steelmakers continued to ramp up output, lifted spot prices of the raw material to five-year peaks in recent months.
Prices have pulled back in recent weeks as shipments to China has rebounded, while steel demand is seasonally weak and output restrictions are in place in some steelmaking hubs, but they remain well above 2018 levels.
Benchmark spot 62% iron ore for delivery to China settled at $91.50/t on August 20, compared with $92.50/t a day ago.
The most-active construction steel rebar contract on the Shanghai Futures Exchange dropped as much as 2.4% to 3,637 yuan/t.
Hot rolled coil, steel used in cars and home appliances, was down as much as 1.8% to 3,661 yuan/t.
Dalian coking coal slipped 1.2% to 1,322 yuan/t.
(Writing by Tian Zhang Editing by Tammy Yang)
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