Iron ore futures retreated on Thursday as hot metal output fell in top buyer China amid a slow resumption of production after the New Year holiday.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) TIO1! closed daytime trade 1.03% lower at 813 yuan ($116.63) a metric ton. It touched its lowest point since January 9 at 812 yuan earlier in the session.
The benchmark February iron ore (SZZFG6) on the Singapore Exchange was down 0.97% at $107 a ton as of 0709 GMT, after hitting its lowest since January 7 at $106.95.
Hot metal output fell 0.26% week-on-week, or by nearly 2 million tons, as several steel mills were slow to resume production in early January, according to data released by the Shanghai Metals Market (SMM) on Thursday. Many other mills also executed planned annual maintenance.
Portside spot cargo transactions were also sluggish as traders and steel mills remained cautious about accumulating cargoes beyond essential Lunar New Year restocking, and inventory buildup-induced supply pressure limited upside room for ore prices, SMM said.
Data showing China’s record monthly steel exports in December lent some support to the market.
“Demand appears to be driven by strong global demand offsetting weak domestic demand,” ANZ research said in a note.
Meanwhile, record-high iron ore imports in December and an expected increase in ore shipments to China are expected to add pressure on prices.
Other steelmaking ingredients on the DCE lost ground, with coking coal NYMEX:ACT1! and coke (DCJcv1) down 1% and 0.11%, respectively.
Steel benchmarks on the Shanghai Futures Exchange were mixed. Rebar RBF1! lost 0.13%, while hot-rolled coil EHR1! was unchanged. Wire rod (SWRcv1) gained 0.15% and stainless steel HRC1! firmed 3.51%.
Source: Reuters