Iron ore futures fell on Monday, with the Dalian benchmark hitting its lowest in nearly six weeks after the Golden Week holiday, as negative steel mill margins, production curbs, and uncertain economic recovery in China weighed on sentiment.
The most-traded January iron ore on China’s Dalian Commodity Exchange ended daytime trade 2.8% lower at 828 yuan ($113.50) per metric ton, having earlier hit 822.5 yuan, its weakest since Aug. 30.
On the Singapore Exchange, the steelmaking ingredient’s benchmark November contract was down 2.3% at $112.25 per ton, as of 0755 GMT, extending losses to a fifth straight session.
Following robust third-quarter gains driven by China’s stimulus measures for its flagging economy and struggling property sector, iron ore prices may soften in the near term as market fundamentals weaken and China’s recovery remains uncertain, analysts said.
“This month may see iron ore market fundamentals in China… begin to deteriorate,” consultancy Mysteel said in its monthly outlook, citing rising supply and softening demand in the country that accounts for more than half of the world’s steel output.
Some member mills of the Yunnan provincial iron ore and steel association have decided to reduce steel production in October to stem losses, according to Mysteel.
China’s trade data for September, including iron ore imports are due on Friday, and may provide a fresh insight on steel and iron ore demand.
Signs of a deepening crisis in China’s property sector also kept the market on edge, with local media reporting that Country Garden may announce an offshore debt restructuring soon, while China Evergrande Group 3333.HK bondholders raised concerns about a possible liquidation.
Shanghai steel benchmarks also fell. Rebar dipped 1.7%, hot-rolled coil shed 1.5%, wire rod SWRcv1 slumped 4.8%, and stainless steel lost 1.1%.
Coking coal DJMcv1 on the Dalian exchange gained 1.2% in a volatile session, while coke DCJcv1 edged down 0.1%.