Iron ore futures prices closed lower on Tuesday, pressured by signs of softening end-use steel demand in China, although restocking ahead of the Chinese National Day holiday provided some support during the session.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) was down 1.23% at 802.5 yuan ($112.83) a metric ton.
The benchmark September iron ore on the Singapore Exchange traded 0.19% lower to $105.6 a ton, as of 0700 GMT.
While manufacturing steel consumption rose in the first half of the year by more than 7% year-on-year, end-use steel demand dropped sharply in the third quarter, keeping iron ore prices under pressure, Chinese broker Galaxy Futures said in a note.
Meanwhile, top steel producer China will “strictly” curb new capacity in the steel sector, as the country tackles excess production that has led to falling prices.
Major steel producers Japan and India reported mixed results in crude steel output. Japan’s crude steel production fell 3.4% in August to 6.64 million tons year-on-year, while India’s output rose 14.2% compared with the same period last year.
Elsewhere, Australian iron ore miners reached a near 18-month high, as robust restocking demand in China ahead of the holiday season drove up iron ore prices.
Broadly, China’s central bank head pledged on Monday to employ a variety of monetary policy tools to support economic recovery. The announcement follows disappointing economic data released last week, including factory output falling to a 12-month low.
Other steelmaking ingredients on the DCE lost ground, with coking coal and coke (DCJcv1) down 0.94% and 0.67%, respectively.
Steel benchmarks on the Shanghai Futures Exchange all fell. Rebar dropped 1%, hot-rolled coil lost 1.33%, wire rod (SWRcv1) eased 0.36%, and stainless steel decreased 0.15%.
Source: Reuters