Dalian iron ore futures dropped to a three-week low on Monday as China’s rising portside inventory and a bleak outlook for domestic steel demand during winter weighed on prices.
The most-traded iron ore contract for January 2021 delivery on China’s Dalian Commodity Exchange slumped as much as 1.9% to 769.50 yuan ($114.86) a tonne, its weakest since Sept. 29, before closing down 0.4% at 781 yuan.
Iron ore’s front-month November contract on the Singapore Exchange erased early losses to trade up 0.2% at $115.14 a tonne.
Imported iron ore stocked at China’s ports increased to a fresh seven-month high of 124.50 million tonnes last week, according to SteelHome consultancy.
Against the backdrop of rising stocks of the steelmaking raw material in China, domestic demand for steel products is set to weaken during the winter season, when construction activity slows.
“(Steel) inventory is still high year-on-year, and as the weather gets colder, the speed of destocking in November and beyond is worrying,” analysts at Sinosteel Futures Co Ltd said in a note.
Clouding prospects for steel demand, China’s economic growth in the third quarter missed forecasts, pointing to persistent challenges for the world’s second-largest economy and the top metals consumer.
Spot iron ore for delivery to China settled at a three-week low of $119.50 a tonne on Friday, SteelHome data showed.
* China’s crude steel output in September rose 10.9% from a year earlier to 92.56 million tonnes.
* Brazil’s Vale SA is on track to reach its goal of producing 400 million tonnes of iron ore by the end of 2022 or early-2023.
* Construction steel rebar on the Shanghai Futures Exchange slipped 0.1%, while hot-rolled coil gained 0.6%. Stainless steel climbed 0.8%.
* Dalian coking coal lost 0.4%, while coke advanced 0.4%.