Iron ore futures eked out gains in volatile trade on Monday following a string of losses, but benchmark prices struggled under $100 a tonne due to weak Chinese demand and swelling portside inventory of the steelmaking raw material.
The most-traded January iron ore on China’s Dalian Commodity Exchange ended daytime trading 1.4% higher at 570.50 yuan ($89.17) a tonne, after a seven-session sell-off.
Iron ore’s December contract on the Singapore Exchange was up 0.5% at $91.95 a tonne by 0705 GMT, after falling 2.2% to $89.45 earlier in the day.
From a record $232.50 a tonne in May, the spot price of benchmark 62%-grade Australian iron ore for delivery to China had sunk more than 140% as Chinese demand collapsed, trading at $94.50 on Friday, the lowest since May 2020, according to SteelHome consultancy data.
Imported iron ore stocked at Chinese ports, which stood at a 31-month high of 145.10 million tonnes last week, based on SteelHome data, added to the downward pressure on prices.
Atilla Widnell, managing director at Singapore-based Navigate Commodities, said he had updated his short-term target price to $97.92-$101.16 a tonne CFR China, from an earlier range of $76-$98, as iron ore looked oversold.
Shipments from Australia and Brazil plunged last week by about 4.5 million tonnes compared with the prior week, based on Navigate’s estimate.
“The material decrease in Australian shipments may be an indication that output from high marginal cost producers could now be feeling the pinch from relatively low iron ore prices,” Widnell said.
Overall sentiment improved after after data showed top steel producer China’s export growth slowed in October but beat forecasts, as global demand improved.
Construction steel rebar on the Shanghai Futures Exchange jumped 2.6%, while hot-rolled coil gained 0.4%. Stainless steel was virtually flat.
Dalian coking coal advanced 0.5% and coke climbed 1.7%.