Iron ore futures retreated on Tuesday, snapping a two-day winning streak, as uncertainty surrounding top consumer China’s plans for fiscal stimulus weighed on the market while a stronger supply outlook further pressured prices.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trade 0.77% lower at 777.5 yuan ($108.89) a metric ton.
The benchmark December iron ore on the Singapore Exchange was 1.45% lower at $101.95 a ton, as of 0700 GMT.
Market sentiment is swinging with policy expectations, said Chinese financial information site Hexun Futures.
There is great policy uncertainty as the National People’s Congress Standing Committee is scheduled to convene in early November, coinciding with the U.S. presidential election, Hexun Futures said.
The Dalian contract hit its highest in more than a week on Monday, buoyed by renewed hopes of further fiscal stimulus from Beijing.
The China Iron and Steel Association’s statement that it would propose specific policies to reshape the sector in the face of weak demand supported yesterday’s gains in steel and iron ore prices, ANZ analysts said.
Imported iron ore prices in China recorded gains on Oct. 28, fuelled by market optimism that Beijing’s upcoming meeting will see additional stimulus policies announced, said Chinese consultancy Mysteel.
Although iron ore demand remains stable, the market faces the problem of peaking production and high supply, said Hexun Futures.
The total volume of iron ore shipped globally, from 19 ports and 16 mining companies in Australia and Brazil, jumped by 1.7 million tons or 6.9% week-on-week to reach 26.3 million tons during Oct. 21-27, Mysteel data showed.
Other steelmaking ingredients on the DCE pulled back further, with coking coal DJMcv1 and coke DCJcv1 down 1.62% and 0.56%, respectively.
Most benchmarks on the Shanghai Futures Exchange were weaker. Rebar SRBcv1 shed 0.44%, hot-rolled coil SHHCcv1 dropped 0.94%, stainless steel SHSScv1 declined 0.84%, although wire rod SWRcv1 advanced almost 1.1%.
Source: Reuters (Reporting by Gabrielle Ng; Editing by Sumana Nandy and Sherry Jacob-Phillips)
