Iron ore retreats on weak China industrial data

Iron ore futures prices fell on Monday after weak industrial data in top consumer China, while most steelmakers completing their pre-holiday restocking ahead of May Day also weighed on sentiment.

The most-traded September iron ore contract on China's Dalian Commodity Exchange (DCE) TIO1! traded 0.17% lower at 877.5 yuan ($121.09) a metric ton, as of 0243 GMT. It, however, has climbed more than 14% so far this month.

The benchmark May iron ore (SZZFK4) on the Singapore Exchange was 0.64% lower at $117.1 a ton.

China's industrial profits fell in March and slowed gains for the quarter compared to the first two months, official data showed on Saturday, raising doubts about the strength of a recovery for the world's second-biggest economy.

"Given that both iron ore supply and stocks hover at a relatively high level, its fundamentals are weaker coking coal with low output and stocks," analysts at Huatai Futures said.

Analysts at investment bank CICC said in a research note that daily hot metal output will likely rise to above 2.3 million tons in the second quarter, but that's not enough to fully digest the significant increase in portside iron ore stocks in the first quarter.

Other steelmaking ingredients on the DCE recorded gains, with coking coal NYMEX:ACT1! and coke (DCJcv1) up 0.55% and 0.81%, respectively.

Most steel benchmarks on the Shanghai Futures Exchange were lower. Hot-rolled coil EHR1! dipped 0.1%, wire rod (SWRcv1) edged down 0.29% and stainless steel HRC1! shed 0.56%. Rebar RBF1!, however, added 0.16%.

"A rapid increase in hot metal output will not do any good to the sustainability of a price rebound as the persistent destocking of steel products has already been priced in," analysts at First Futures noted.

($1 = 7.2467 Chinese yuan)