Iron ore and steel futures in China fell for a fourth session on Monday, with appetite for trading slim as many market participants are already away ahead of the Lunar New Year holiday.
Chinese markets will be shut for a week from Friday.
“Everyone’s off already,” said a trader in Singapore, adding that activity in the physical market was also slow.
“But we are seeing outflow of money from commodities to equities. Transacting commodities futures in China is high-cost and high-margin and the government is relaxing requirements on equities futures,” he said.
China’s exchanges hiked fees and trading margins on many commodities including steel and iron ore last year following wild price swings.
The most-active rebar on the Shanghai Futures Exchange was down 2 percent at 3,186 yuan ($466) a tonne by 0218 GMT.
Iron ore on the Dalian Commodity Exchange dropped 1.8 percent to 615.50 yuan per tonne. The steelmaking raw material has dropped almost 8 percent from a three-year high reached last week.
Iron ore had benefited from this month’s surge in steel prices as China boosted efforts to tackle a glut, recently aiming to shut producers of substandard steel by the end of June.
China asked local authorities to submit a list of these producers by Jan. 20, with details of specific measures and a timetable for phasing out production.
The continued weakness in futures could further drag down spot iron ore prices.
Iron ore for delivery to China’s Qingdao port .IO62-CNO=MB slipped 0.7 percent to $80.41 a tonne on Friday, easing for a second day in a row, according to Metal Bulletin.