Dalian and Singapore iron ore futures fell on Thursday and were on track to post quarterly losses due to persistent demand worries for the steel-making ingredient in top steel producer China.
The most-traded iron ore for September delivery on China’s Dalian Commodity Exchange ended daytime trade 2.2% lower at 791 yuan a tonne after four straight sessions of gains, stretching its quarterly loss to more than 10%.
On the Singapore Exchange, iron ore’s front-month July contract was down 1.5% at $120.90 a tonne, as of 0703 GMT, and on pace to mark its third consecutive monthly fall.
Dalian iron ore hit this year’s peak at 948 yuan a tonne on June 6, while SGX iron ore had risen up to $168.65 a tonne on March 8, supported by hopes of additional stimulus for China’s struggling economy.
In the spot market, the benchmark 62%-grade iron ore bound for China, which traded at $124 a tonne on Wednesday, based on SteelHome consultancy data, had fallen 24% from this year’s peak of $163 hit on March 7.
China’s dynamic zero-COVID policy and unfavourable weather conditions for construction activity weighed on ferrous markets in recent weeks, along with fading hopes of further economic support.
But positive signals from Chinese authorities helped iron ore regain some lost ground of late.
“China is becoming more willing to accept single-digit COVID cases,” said Iris Pang, ING chief economist in Greater China, citing moves to ease quarantine requirements for international arrivals and the scrapping or relaxing of testing mandates in several cities.
Pang said this reflects “a more flexible policy than back in early June”, although she warned that the risk of lockdowns still exists.
Construction steel rebar on the Shanghai Futures Exchange edged up 0.2%, while hot-rolled coil was flat. Stainless steel rose 1.3%.
Source: Reuters