Iron ore futures prices fell for a second consecutive session on Wednesday, undermined by weak near-term demand from top consumer China and growing concerns about consumption in the reminder of the year.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) DCIOcv1 ended daytime trade 2.41% lower at 749 yuan ($104.32) a metric ton, the lowest since Aug. 2.
The benchmark September iron ore SZZFU4 on the Singapore Exchange slid 1.75% to $101.05 a ton by 0726 GMT, also hitting the lowest since Aug. 2.
“It’s difficult to see a substantial upward drive amid a persistent downturn in the steel market,” analysts at First Futures said in a note.
Moreover, mounting doubts over whether China’s steel exports will maintain the strong momentum in the second half of the year weighed on buying appetite for iron ore.
China’s iron ore imports jumped 5.3% in July from a month earlier to a six-month high as miners rushed to meet quarterly shipment targets and improving margins for steelmakers boosted demand.
Traders are concerned that a flood of steel exports from China could ease in coming months, putting a break on strong demand for the steelmaking raw material, ANZ analysts said in a note.
“We have been closely monitoring the change in steel exports and the scale of steel output cut this year,” said an East China-based steel producer, requesting anonymity as he is not authorised to speak to media.
Also, China’s domestic steel market has not fully shrugged off pressure caused by a wave of sell-off activities last month following a requirement to switch to the new mandatory national standards.
Steel benchmarks on the Shanghai Futures Exchange lost ground. Rebar SRBcv1 shed 0.96%, hot-rolled coil SHHCcv1 ticked down 0.66%, wire rod SWRcv1 tumbled 4.17% and stainless steel SHSScv1 fell 0.39%.
“Downstream steel demand will not see obvious improvement any time soon as the infrastructure sector remained lacklustre,” First Futures’ analysts said.
Other steelmaking ingredients on the DCE were mixed, with coking coal DJMcv1 flat, while coke DCJcv1 dipped 0.6%.
Source: Reuters