Dalian iron ore futures prices extended their decline on Monday, dragged down by slow near-term demand recovery and growing doubts on mid-to-long-term prospects for the key steelmaking ingredient in top consumer China.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) gave up some earlier losses and ended daytime trade 0.11% lower at 890 yuan ($123.63) a metric ton, after touching an intra-day low of 860.5 yuan.
“Ore demand remained under pressure amid lower-than-expected hot metal output and we do not see any strong driving factors for a price rebound for the moment,” analysts at First Futures said in a note.
The average daily hot metal output among mills surveyed declined for a second session by 0.3% on-week to 2.23 million tons as of March 1, the lowest since early February, data from consultancy Mysteel showed.
Mounting doubts on whether policymakers in the world’s second-largest economy would announce forceful stimulus to resolve ongoing debt crisis and property woes during the annual National People’s Congress (NPC) which will kick off on Tuesday are also weighing on sentiment.
“The focus (of NPC) is likely to be on climate targets, which could ultimately weaken demand for iron ore,” analysts at ANZ bank said.
The situation will likely change in mid-March when portside ore inventories will shift to a decline from the continuous increase and there is a relatively big room for demand recovery against the current level of hot metal output, analyst at Everbright Futures wrote in a note.
The benchmark April iron ore SZZFJ4 on the Singapore Exchange was, however, 2.08% higher at $115.6 a ton, partly on the back of a softening U.S dollar =USD amid lower treasury yields.
Other steelmaking ingredients on the DCE also weakened, with coking coal DJMcv1 and coke DCJcv1 down 1.02% and 1.4%, respectively.
Steel benchmarks on the Shanghai Futures Exchange were broadly lower. Rebar SRBcv1 fell 0.69%, hot-rolled coil SHHCcv1 dropped 0.56%, wire rod SWRcv1 shed 0.17% and stainless steel SHSScv1 lost 1.24%.
Source: Hellenic Shipping News
