Prices of iron ore futures slid on Monday, dragged down by heightened supply pressure while steel demand in top consumer China has been weakened by soft construction activity.
The most traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) DCIOcv1 ended daytime trade 1.08% down at 734 yuan ($102.21) a metric ton.
The contract hit an intraday low at 725.5 yuan a ton, its lowest since Aug. 15, 2023.
The benchmark September iron ore contract SZZFU4 on the Singapore Exchange was down 1.49% at $99.4 a ton at 0718 GMT after hitting the lowest level since July 31 at $98.40.
“The issuance pace of new special bonds in July remained slow, weakening expectations for (steel demand from the)infrastructure sector,” Everbright Futures said in a note.
Special bonds are typically used to fund infrastructure projects.
Ore demand will continue falling as shrinking profitability among steelmakers spurred a wave of production stoppages, First Futures analysts said.
About 95% of Chinese steelmakers are operating at a loss, data from consultancy Mysteel showed.
Other steelmaking ingredients on the DCE lost ground, with coking coal DJMcv1 and coke DCJcv1 down 2.72% and 3.24% respectively.
Steel benchmarks on the Shanghai Futures Exchange posted losses amid feeble demand and lower raw materials prices.
Rebar SRBcv1 retreated 1.95%, hot-rolled coil SHHCcv1 shed 2.09%, wire rod SWRcv1 dropped 1.25% and stainless steel SHSScv1 was down 0.97%.
“The conflict between supply and demand caused by the switch to new rebar standards has not been fully resolved,” Jinrui Futures analysts said in a note, adding that they expect the ferrous market to face further downward pressure in the near term.
Source: Reuters