Benchmark Dalian iron ore futures fell for a third straight session on Tuesday, as a slide in steel prices in China spurred by signs of slowing demand dragged down the raw material.
The most-traded iron ore for September delivery on China’s Dalian Commodity Exchange ended daytime trading 0.7% lower at 1,149 yuan ($179.81) a tonne, after dropping as much as 4.5% to its lowest since June 1.
The decline in China’s inventory of construction steel rebar slowed sharply last week, indicating easing demand, which has been anticipated with the monsoon season bringing rains to southern provinces while scorching temperatures hit the north.
However, it might be a little too early to worry about steel demand in China, said Atilla Widnell, managing director at Navigate Commodities in Singapore.
Iron ore’s most-active July contract on the Singapore Exchange rose 3.1% to $199.85 a tonne by 0709 GMT, after earlier falling as much as 2%.
China’s rebar inventories have fallen more than 40% from the peak seen in March, while the country’s stocks of hot-rolled coil — which is used in car bodies and home appliances — fluctuated over the last five weeks, SteelHome data showed.
“The devil is in the detail, however, and we recommend waiting for two more weeks’ worth of data points to confirm whether construction steel demand is entering its seasonal slowdown,” Widnell said.
Rebar on the Shanghai Futures Exchange shed 1.8%, while hot-rolled coil fell 1.7%, both hitting the weakest since June 1 in early trade. Stainless steel SHSScv1 dropped 1.5%.
Other steelmaking ingredients held ground, with Dalian coking coal edging up 0.2% and coke advancing 0.5%.
Spot iron ore in China dropped to $203 a tonne on Monday, from Friday’s $207, off about 12% from last month’s record peak, SteelHome data showed.