Iron ore retreated on Wednesday, as lower-than-expected steel output and a protracted property crisis fueled concerns over demand outlook in the world’s largest consumer although improved Chinese economic data supported prices earlier the session.
The most-traded January iron ore on China’s Dalian Commodity Exchange (DCE) ended daytime trading 0.4% to 861 yuan ($117.76) a metric ton, giving up gains recorded earlier the session.
The benchmark November iron ore on the Singapore Exchange fell 1.4% to$115.85 a ton as of 0718 GMT, the lowest since Monday.
China’s crude steel output in September fell 5% from August and was down 5.6% from a year before, official data showed, as more steel makers cut production due to high raw material prices and weak demand in the world’s biggest steel producer.
Meanwhile, China’s property sales and investment posted double-digit declines as efforts to support big cities failed to bolster confidence in an industry struggling to emerge from crisis, although the pace of contraction slowed.
“The key is still how steel market actually performs as it will affect needs for the upstream raw materials,” said Cheng Peng, a Beijing-based analyst at Sinosteel Futures.
“Low inventory and wide price difference between spot and futures prices did support iron ore, but data showed there is pessimism in the steel market.”
The weakness came after prices were supported earlier on improved economic data.
China’s third-quarter gross domestic product (GDP)grew 4.9% from last year, National Bureau of Statistics (NBS)data showed on Wednesday, beating analysts’ expectations in a Reuters poll for a 4.4% increase in the world’s second-biggest economy.
Other steelmaking ingredients also lost ground, with coking coal DJMcv1 and coke DCJcv1 on the DCE down 3.02% and 3.87%, respectively.
Steel benchmarks on the Shanghai Futures Exchange posted losses as well.
Rebar SRBcv1 shed 1.01%, hot-rolled coil SHHCcv1 declined 0.74%, wire rod SWRcv1 fell 1.65% and stainless steel SHSScv1 dropped 0.44%.