Iron ore futures extended falls on Tuesday to their lowest levels in nearly seven weeks, as signs of weakening in both near-term demand and mid-to-long term uptake prospects in top consumer China and lingering high portside inventories weighed.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trade 2.11% lower at 834 yuan ($115.11) a metric ton, the lowest since April 17, following a fall of more than 2% on Monday.
The benchmark July iron ore on the Singapore Exchange tumbled 2.21% to the lowest since April 17 to $108.2 a ton, as of 0730 GMT, fully shrugging off earlier gains thanks to growing expectations of U.S. Federal Reserve cutting interest rates after softer-than-expected economic data.
“Some steelmakers scaled back procurement of raw materials including iron ore after a steeper fall in hot metal output last week and a pick-up in steel inventories due to softening downstream demand,” said Zhuo Guiqiu, an analyst at Jinrui Futures.
Iron ore transaction volumes at major ports slid by 17% from the previous session to 735,000 tons on Monday, data from consultancy Mysteel showed.
“Portside inventories hovered high. Also, the expectation of a crude steel output control later the year exacerbated worry on falling ore consumption, sending headwinds to prices,” Zhuo added.
Steel supply changes have been under focus after Beijing reiterated last week its intention to control crude steel output further this year and as demand receded amid higher temperatures and forecast of heavy rains in southern regions.
Prices of the key steelmaking feedstock have lost more than 6% from last week, even as more regional stimulus for the property market was unveiled to spur the struggling sector.
Other steelmaking ingredients on the DCE receded, with coking coal and coke down 0.57% and 0.9%, respectively.
Steel benchmarks on the Shanghai Futures Exchange retreated further. Rebar shed 0.9%,hot-rolled coil lost 0.58%, wire rod dipped 0.77% and stainless steel fell 0.69%.
China’s crude steel output in 2024 may fall to 1.015 billion tons, analysts at Hongyuan Futures said in a note, from around 1.019 billion tons in 2023.
Source: Hellenic Shipping News
