Reuters reported that Shanghai steel futures dropped for the third day in a row on Wednesday, putting more pressure on iron ore prices which languished near 31 month lows as weak steel demand curbed appetite for the raw material.

The most-traded rebar for January delivery on the Shanghai Futures Exchange was off 0.3% at CNY 3,655 a tonne by 0533 GMT. The contract hit a record low of CNY 3,631 earlier this month.

Mr Henry Liu head of commodity research at Mirae Asset Securities in Hong Kong said "Right now, steel prices don't have much room to fall further and (current levels) may also be the bottom for iron ore."

He said that "But even if we see some improvement in demand, a strong rebound in prices is unlikely. There's still a lot of steel inventory to digest and overcapacity in China."

Inventory of five major steel products in China including rebar and hot-rolled coil, held by traders stood at 15.1 million tonnes at the end of last week, 9.4% more than a year ago based on data compiled by Bank of America-Merrill Lynch.

Steel demand in China, the world's biggest consumer and producer, is slowing along with the economy which grew at its weakest pace in more than three years in the second quarter.

Source - Reuters

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