Iron ore futures fell on Wednesday for a second straight session, driven by concerns over the demand outlook stemming from a worsening Sino-U.S. trade spat and rising steel stocks in top consumer China.
U.S. President Donald Trump said on Tuesday that Washington was considering terminating some trade ties with China.
In another sign of tensions between the world’s two largest economies that weighed on market sentiment and pressured commodity prices, the U.S. and China on Tuesday began charging additional port fees on each other’s ocean shipping firms.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) closed daytime trade 1.46% lower at 776.5 yuan ($108.97) per metric ton. The contract touched a more than one-month low on Tuesday.
The benchmark November iron ore (SZZFX5) on the Singapore Exchange slid 0.45% to $104.7 a ton as of 0810 GMT.
Also weighing on prices of the key steelmaking ingredient was accumulated steel stock, which could undermine steel prices, squeeze margins and dent mills’ appetite for more feedstocks.
“The latest data showed steel inventories continued to pile up, fanning concerns over ore demand outlook,” said Zhuo Guiqiu, an analyst at broker Jinrui Futures.
“Hot metal output may see further falls amid widening losses at some mills.”
In the near term, however, ore demand remained strong, lending support to prices, according to analysts at Everbright Futures.
Daily crude steel output among member steelmakers in the first 10 days of October climbed by 7.5% from the corresponding 10-day level in September, data from the state-backed China Iron and Steel Association showed.
Other steelmaking ingredients like coking coal and coke (DCJcv1), rose 1.01% and 0.34%, respectively.
Steel benchmarks on the Shanghai Futures Exchange were mixed. Rebar RBF1! fell 0.85%, stainless steel HRC1! shed 0.24%, hot-rolled coil lost 0.86% while wire rod (SWRcv1) advanced 0.45%.
Source: Reuters