Iron ore slides on disappointing China data, falling demand

0
851

Iron ore futures fell on Monday on downbeat investor sentiment due to disappointing data in top consumer China as well as falling demand for the key steelmaking ingredient.

The most-traded May iron ore on China’s Dalian Commodity Exchange (DCE) ended daytime trading 0.37% lower at 955 yuan ($133.00) a metric ton.

The benchmark January iron ore on the Singapore Exchange fell 0.64% to $134.65 aton, as of 0700 GMT.

China’s consumer prices fell the fastest in three years in November, while factory-gate deflation deepened, according to data from the National Bureau of Statistics (NBS). This indicates rising deflationary pressure as weak domestic demand casts doubt over the country’s economic recovery.

This comes after Beijing said it would spur domestic demand to encourage economic recovery in 2024, the Politburo, a top decision-making body of the ruling Communist Party, was quoted by state media as saying on Dec. 8.

Ratings agency Moody’s slapped a downgrade warning on China’s credit rating on Dec. 6, weighed by the growth outlook of the world’s second-largest economy.

Diminishing demand is also putting pressure on ore prices, said analysts.

“Domestic ore demand has obviously weakened with the hot metal output falling for six weeks in a row; an increasing number of steekmakers in many regions across the country have implemented annual maintenance on furnaces, reducing demand for ore,” analysts at Sinosteel Futures said in a note.

“Also, steel mills are wary of restocking amid high ore prices; and we expect portside ore inventories to continue piling up in coming weeks,” they said.

Other steelmaking ingredients also lost ground, with coking coal DJMcv1 and coke DCJcv1 on the DCE down 2.32% and 0.21%, respectively.

Lower raw material prices dragged down steel benchmarks on the Shanghai Futures Exchange. Rebar SRBcv1 shed 0.27%, hot-rolled coil slipped 0.46%, wire rod SWRcv1 was little moved, and stainless steel SHSScv1 lost 0.15%.

Source: Reuters

LEAVE A REPLY

Please enter your comment!
Please enter your name here