Dalian iron ore rose in a choppy session, while the Singapore benchmark retreated from a one-week high, underlining fragile sentiment as improved supply prospects could add pressure on prices that have collapsed due to weak Chinese demand.
Iron ore’s January 2022 contract on China’s Dalian Commodity Exchange ended daytime trading 1.9% higher at 802.50 yuan ($123.90) a tonne on Wednesday, off a session-high of 829 yuan, its strongest since Aug. 18.
The steelmaking ingredient’s September contract on the Singapore Exchange was down 0.4% at $147.45 a tonne, as of 0713 GMT, after a 9.1% advance in the previous session.
Spot iron ore traded at $147.50 a tonne on Tuesday, bouncing off a more than eight-month low, SteelHome consultancy data showed, as demand concerns somewhat eased.
China’s ongoing steel production restrictions and COVID-19 curbs weighed heavily on iron ore in recent weeks.
Prices have fallen more than 30% from the record peaks in May, and a further drop was possible, according to analysts Erik Hedbord and Richard Lu at commodities consultancy CRU.
“CRU forecasts iron ore prices to decline further towards the end of the year, as we see a more balanced market with Chinese demand likely to stabilise for the rest of the year, while seaborne supply continues to improve,” they said in their latest market insight.
Iron ore producers in Australia, the biggest supplier to top steel producer China, have been struggling to keep production elevated, though the analysts said shipment volumes usually improve in the last quarter.
But they ruled out a price slump below $100 a tonne, citing a still-tight market.
Dalian coking coal DJMcv1 and coke DCJcv1 scaled record peaks for a third day, rising 3.3% and 3.1%, respectively, on supply concerns.
Rebar on the Shanghai Futures Exchange SRBcv1 gained 0.9%, while hot-rolled coil SHHCcv1 added 0.2%. Stainless steel SHSScv1 climbed 1.3%.