Iron ore futures fell on Thursday as traders locked in gains following Singapore prices’ longest rally since June and the Dalian benchmark’s 10-session advance, and as worries persisted over China’s economic slowdown and property sector distress.
The steelmaking ingredient’s most-active September contract on the Singapore Exchange was down 1.4% at $111.65 per metric ton, as of 0818 GMT, after gaining for five straight sessions and scaling a four-week peak earlier in the day.
The most-traded January iron ore on China’s Dalian Commodity Exchange ended daytime trade 0.9% lower at 811 yuan ($111.39) a ton, after earlier trading near Wednesday’s two-year peak of 832.50 yuan.
Dalian and SGX iron ore have risen about 7% and 5% this week, respectively, while spot prices also hit four-week highs, as China’s policy support for its sputtering economic recovery bolstered risk-on sentiment.
Dwindling iron ore port stockpiles in top steel producer China and ramped-up steel production ahead of a seasonal pick-up in domestic construction activity from September to October added fuel to the rally.
But analysts said caution should prevail.
“Even if China were to step up incremental policy support meaningfully now, there would still be a time lag for their effects to manifest,” Citi analysts said in a note.
Any pullback in iron ore prices may be limited, however, in the absence of clear and fresh directives from Chinese authorities to limit steel output this year under a policy aimed at curbing carbon emissions.
“The market is expected to continue to play games before the implementation of the production restriction policy,” Zhongzhou Futures analysts said in a note.
Most steel benchmarks in Shanghai and other steelmaking ingredients in Dalian also pulled back.
Coking coal DJMcv1 fell 1.4% and coke DCJcv1 lost 1.7%. Rebar SRBcv1 shed 1.2% and hot-rolled coil SHHCcv1 dropped 1.6%, while wire rod SWRcv1 climbed 2.9%. Stainless steel SHSScv1 dipped 1.5%.
Source: Hellenic Shipping News
