China steel futures slipped on Tuesday, retreating from a 1-1/2-month high hit in the previous session on high inventories of steel products and concerns about demand from the real estate market. China's new home prices grew at its slowest pace in nearly a year in August with developers seen cutting prices, stoking worries if the property market can remain resilient to provide cushion for the country's slowing economy.
The most-active construction steel rebar contract on the Shanghai Futures Exchange, for January delivery, declined 0.6% to 3,533 yuan a tonne. Hot-rolled coil, used in cars and home appliances, fell 0.8% to 3,529 yuan per tonne. Although consumption of steel products had risen recently, inventory is still higher than last year, Huatai Futures wrote in a note. The most-traded iron ore contract on the Dalian Commodity Exchange, for January 2020 delivery, dropped 1.8% to 666 yuan a tonne.
Steel and iron ore data analytics firm Tivlon Technologies said funds flowed out of the ferrous commodities complex as market participants are worried about uncertainty in the Middle East after an attack on Saudi Arabia oil facilities. "However, we are surprised to see the outflow is relatively measured given such a big incident," the Singapore-based firm said.
Benchmark 62% iron ore for delivery to China, as assessed by SteelHome consultancy, settled higher at $98 a tonne on Monday. Executives at major Chinese heavy industrial firms expect routine anti-pollution measures but not wide-spread crackdown ahead of the National Day holiday as during previous big events. The vice finance minister of China will lead a delegation to visit the United States on Wednesday for trade talks, paving way for the high-level economic and trade consultations in October in Washington.
China's central bank extended loans from its medium-term lending facility on Tuesday but kept the one-year lending rate unchanged, as it seeks to maintain adequate liquidity in a slowing economy without flooding the banking system. Other steelmaking ingredients also faltered, with Dalian coking coal for January delivery down 0.4% at 1,350 yuan a tonne, while coke slide 0.9% to 1,983 yuan a tonne.