Iron ore retreats on disappointing steel demand data


Dalian and Singapore iron ore futures retreated in afternoon trade on Thursday after weaker-than-expected steel demand data disappointed the market.

Output of construction steel products, including rebar and wire rod, declined by 1.04% week-on-week to 4.23 million tonnes during the week as of April 6, while the apparent demand for both fell by 6.7% week-on-week to 4.36 million tonnes over the same period, data from consultancy Mysteel showed.

The most-traded September iron ore futures contract on the Dalian Commodity Exchange (DCE)DCIOcv2ended daytime trading 1% lower at a two-week low of 793 yuan ($115.35) a tonne, following a 2.7% drop in the first two working days of the week after sentiment was undermined by fresh intervention from the state planner.

China’s National Development and Reform Commission (NDRC) said on Tuesday that it would step up supervision of iron ore markets and urged futures companies not to deliberately exaggerate price increases.

The Chinese market was closed on Wednesday for a public holiday.

Similarly, on the Singapore Exchange, the benchmark May iron ore SZZFK3 was 0.47% lower at a two-week low at $117.3 a tonne, as of 0702 GMT, marking a drop of 6.4% so far this week.

“What matters most is the actual (steel) demand performance for the moment. If demand could not pick up in line with expectations, (iron ore) prices may feel further pressure,” said a Shanghai-based iron ore analyst.

Weak steel demand also clouded futures prices of other steel-making raw materials, including coking coal and coke. Coking coal DJMcv1 fell 1.19% and coke DCJcv1 slid 2.5%.

Prices of steel futures were still on the downward trajectory. Rebar on the Shanghai Futures Exchange SRBcv2 shed 1.5% to 3,938 yuan a tonne, hot-rolled coil SHHCcv2 dipped 1.42%, and stainless steel SHSScv1 lost 1.84%.

“The (steel) demand has recently been relatively weak while production hovered at a high level, putting prices under downward pressure,” analysts at Everbright Futures said in a morning note.

Source: Reuters


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