[MANILA] Chinese steel prices dropped to their lowest in nearly three months on Monday on worries that fresh efforts to curb home purchases could slow demand in the top global steel consumer.
Financial markets reopened in the country on Monday after closing on Thursday and Friday for China's Mid-Autumn Festival.
Home prices there rose at a faster pace in August, data showed, with the buying frenzy spilling over from first-tier cities to other parts of the country. Second and third-tier cities such as Xiamen, Nanjing and Wuhan are now stepping up measures to cool overheated markets.
Housing authorities from the eastern city of Hangzhou announced on Sunday it will begin to restrict home purchases from Sept 19. Families who are not registered as residents and already own one or more houses in certain districts will not be able to purchase another home, new or pre-owned.
The most-traded rebar on the Shanghai Futures Exchange touched a session low of 2,190 yuan (S$448) a tonne, the weakest since June 29. The construction steel product was down one per cent at 2,237 yuan by midday.
"The supply of steel is quite big and demand is at risk because of the new restrictions on real estate purchases," said a Shanghai-based iron ore trader.
"This will affect new property projects and eventually it will affect demand for steel."
A surge in Chinese steel prices spurred by Beijing's efforts to stimulate the economy caused domestic crude steel output to rise for a sixth straight month in August.
The decline in China's steel prices in September came after a three-month gain.
Tracking losses in steel, raw material iron ore traded on the Dalian Commodity Exchange was last down 0.6 per cent at 390.50 yuan a tonne. It fell as far as 383 yuan, the lowest since July 26.
Spot iron ore prices were flat on Thursday and Friday owing to the Chinese holidays.
Iron ore for delivery to China's Tianjin port was unchanged at US$55.50 a tonne on Friday, according to The Steel Index.
The spot benchmark has slid 10 per cent since touching a 3-1/2-month peak of US$61.80 on Aug 16.