Dalian iron ore futures prices extended declines to hit a five-month low on Tuesday, pressured by weak sentiment amid subdued demand in top consumer China.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) narrowed some earlier losses and ended daytimetrade 2.23% lower at 831.5 yuan ($115.88) a metric ton, after touching itslowest since Oct. 11 at 820.5 yuan a ton in the morning.
The underlying driving force to this round of price fall in raw materials is the slow demand recovery from the downstream sectors, said Chu Xinli, a Shanghai-based analyst at China Futures.
China’s latest National People’s Congress meeting did not ease prospects for the property market and a weak start to the construction season is boding ill for steel demand, analysts at ANZ bank noted.
Moody’s said on Monday it withdrew ‘Baa3’ rating for Vanke 2202.HK, China’s No.2 developer by sales, and assigned ‘Ba1’ corporate family rating (CFR), adding that all of Vanke’s ratings would be on “review for downgrade”.
“Deteriorating fundamentals contributed to price weakness as many steelmakers have been cautious about restocking ore when their production resumption pace has been dragged by tepid downstream demand; and we expected price to consolidate between 800 and 820 yuan a ton in the near term,” Chu added.
The benchmark April iron ore SZZFJ4 on the Singapore Exchange was, however, 1.35% higher at $108.7 a ton, as of 0703 GMT, supported by stronger bets on the U.S. Federal Reserve cutting its key interest rate in June.
Other steelmaking ingredients on the DCE were mixed, with coking coal DJMcv1 advancing 0.68%, whilecoke DCJcv1 edged down 0.31%.
Steel benchmarks on the Shanghai Futures Exchange moved sideways. Rebar SRBcv1 dipped 0.11%, stainless steel SHSScv1 fell 0.44%, while hot-rolled coil SHHCcv1 added 0.16% and wire rod SWRcv1 ticked up 0.21%.
“Steel stocks have been piling up to a level higher than the same period a year before; lower output and higher stocks mirrored weak downstream demand,” analysts at GF Futures said in a note.
Source: Reuters