Dalian iron ore futures extended declines to hit a more than six-week low on Thursday, weighed down by the anticipation of falling demand in top consumer China.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange TIO1! closed daytime trade 0.89% lower at 773.5 yuan ($108.56) a metric ton, after touching its lowest since September 1 at 766.5 yuan earlier in the session.
Benchmark November iron ore (SZZFX5) on the Singapore Exchange, however, slightly eased 0.02% to $105.1 a ton as of 0809 GMT as hopes of further U.S. Federal Reserve rate cuts helped curb some losses.
The contract hit a nearly one-week low of $103.6 a ton on Wednesday.
A softer U.S. currency DXY, meanwhile, makes dollar-priced commodities cheaper for buyers holding other currencies.
The market has shifted focus back to the potentially softening fundamentals in the steel industry amid signs of de-escalation of trade tensions between the U.S. and China, said Steven Yu, a senior analyst at consultancy Mysteel.
“While it beat expectations that stocks fell this week, there is still anticipation of a pick-up in steel inventories in coming weeks, which could eventually reduce appetite for ore,” said Yu.
Also, the disappointing credit data in China heightened worries about the demand outlook.
China’s new bank loans rose less than expected in September, as policymakers battled to reverse a prolonged property slump and curb industrial overcapacity.
Concerns over the renewed U.S.-China trade war woes, fuelled by the tit-for-tat port fees, overshadowed hopes for talks between the two sides, weighing on sentiment and driving down ore prices.
Most steel benchmarks on the Shanghai Futures Exchange gained ground. Rebar RBF1! added 0.16%, wire rod (SWRcv1) climbed 0.72%, stainless steel HRC1! advanced 0.48%, while hot-rolled coil EHR1! lost 0.19%.
Coking coal NYMEX:ACT1! and coke (DCJcv1), also steelmaking ingredients, rose 3.36% and 2.26%, respectively.
Source: Reuters