Iron ore futures dipped to six-week lows on Tuesday, dragged lower by concerns about looming steel production cuts in China and uncertainty over the country’s struggling property sector.
Other steelmaking ingredients were also under heavy pressure from worries about Chinese demand, with both coking coal and coke sliding by more than 6%.
The most-traded January iron ore on China’s Dalian Commodity Exchange DCIOcv1 ended daytime trade 1.7% lower at 819 yuan ($112.40) per metric ton, having hit its weakest since Aug. 30 earlier in the session at 812.50 yuan.
The steelmaking ingredient’s benchmark November contract SZZFX3 on the Singapore Exchange, dropped as much as 2.7% to $109.25 per ton. It has fallen about 9% from the previous quarter’s peak of $121.10.
“Sentiment remained downbeat amid a broader weakness in construction activity” in China, ANZ said in a note.
“Unfavourable margins have also raised the prospect of steel production cuts during winter.”
News highlighting the deepening property sector crisis in top steel producer China also kept traders cautious. China’s largest private property developer, Country Garden Holdings 2007.HK, said it might not be able to meet all of its offshore payment obligations when due or within the relevant grace periods.
Coking coal DJMcv1 and coke on the Dalian exchange sank 6.5% and 6.1%, respectively.
“We do expect the supply situation to improve and demand to ease as Chinese steel production moderates,” Westpac said in its monthly outlook for metallurgical coal.
As steel demand remains dull and losses at steelmakers widen, the daily average hot metal output in 247 Chinese steel mills monitored by consultancy Mysteel declined by 19,800 tons on week as of Oct. 8, causing an expected drop in coke demand.
Steel benchmarks in Shanghai were mostly lower, with rebar SRBcv1 and hot-rolled coil SHHCcv1 both shedding 0.9%, and stainless steel SHSScv1 losing 0.7%, while wire rod SWRcv1 was virtually flat.
Source: Hellenic Shipping News
