Iron ore futures prices declined on Monday, pressured by sluggish steel demand and mounting inventories at Chinese ports.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trade 1.57% lower at 784 yuan ($110.11) a metric ton.
The benchmark September iron ore (SZZFU5) on the Singapore Exchange was down 0.02% at $105.3 a ton, as of 0705 GMT.
Iron ore futures fell sharply last week as steel mills slowed down restocking ahead of the Chinese National Day holidays from October 1-8, analysts from ANZ said in a note.
Chinese broker Hexun Futures said high steel supply, combined with weak demand, was weighing on the market.
Total iron ore stockpiles at ports in China climbed 0.29% week-on-week to about 132.5 million tons, as of September 26, SteelHome data showed.
Current high levels of molten iron production, combined with strong port arrivals, suggest that port inventories are likely to rise further, said broker Everbright Futures.
If steel demand weakens significantly, narrowing profit margins at steel companies could prompt voluntary production cuts, leading to a build-up of iron ore inventories, the broker said.
Still, blast furnace operations at integrated steel mills in China have remained strong recently, according to consultancy Mysteel.
The average furnace capacity utilisation rate rose for a third straight week to 90.86% in the September 19-25 week, an increase of 0.51 percentage point from the previous week, Mysteel data showed.
Other steelmaking ingredients on the DCE slumped, with coking coal NYMEX:ACT1! and coke (DCJcv1) down 4.98% and 4.16%, respectively.
Steel benchmarks on the Shanghai Futures Exchange all lost ground. Rebar RBF1! fell 1.34%, hot-rolled coil EHR1! eased 1.23%, wire rod (SWRcv1) was down 1.21% and stainless steel HRC1! lost 0.7%.
Source: Reuters