Iron ore futures settled slightly lower on Wednesday amid weakening demand signals, while traders awaited upcoming economic meetings in China for guidance on potentially supportive growth targets.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) was 0.19% lower at 799.5 yuan ($113.19) a metric ton.
The benchmark January iron ore (SZZFF6) on the Singapore Exchange rose 0.24% to $104.15 a ton, as of 0724 GMT.
A broader macro trade is driving speculation across China-centric industrial commodities futures, said Atilla Widnell, managing director at Navigate Commodities in Singapore.
Investors are awaiting signals on next year’s growth targets from the annual agenda-setting Central Economic Work Conference and the December Politburo meeting.
“Some traders are positioning ahead of these events to ride any potential rally, though we see a low likelihood of positive steel-intensive consumption programs being announced from these meetings,” Widnell added.
Iron ore concentrate prices in key steelmaking hub Tangshan are expected to remain stable in the near term, said market intelligence provider Shanghai Metals Markets (SMM).
Hot metal production, a gauge of iron ore demand, is on a downward trend, with weakening fundamentals putting pressure on ore prices, though sentiment remains positive ahead of key policy meetings, SMM added.
Due to recent stricter environmental inspections, pig iron production is expected to continue to decline this week, putting pressure on raw materials, said broker Galaxy Futures.
Still, Chinese steel prices are expected to increase in December, driven by the improved macroeconomic environment, as well as the recovery in market fundamentals, said consultancy Mysteel’s chief analyst Wang Jianhua in his latest monthly outlook.
Other steelmaking ingredients on the DCE were mixed, with coking coal down 2.19% and coke (DCJcv1) up 0.4%.
Steel benchmarks on the Shanghai Futures Exchange were also mixed. Rebar RBF1! edged up 0.06%, and stainless steel HRC1! climbed 0.2%, while hot-rolled coil EHR1! eased 0.18%, and wire rod (SWRcv1) fell 0.21%.
Source: Reuters