China iron ore slumps nearly 3% on winter steel demand outlook
Iron ore futures in China touched a three-week low on Friday and posted their second consecutive weekly decline, as prospects of tepid steel demand over winter weighed on prices of the key steelmaking raw material.
Dalian Commodity Exchange’s most-traded iron ore contract, with January 2020 expiry, finished 2.8% lower at 600 yuan ($85.95) a tonne, after hitting 599.50 yuan just before the trading ended, its weakest since Oct. 18.
On the Singapore Exchange, the front-month December contract was down 2.2% at $78.58 a tonne, as of 0720 GMT.
“Steel demand is slowing down due to the weather issue. In the northern part of China, the temperature is dropping, and very soon construction activities will be halted in many areas,” a Shanghai-based trader said.
Rising iron ore inventory at China’s ports, hovering around a six-month high, is also weighing on both futures and spot prices, while a downbeat outlook for global steel demand is another concern, the trader said.
ArcelorMittal, the world’s largest steelmaker, has cut its forecasts for demand in its main U.S. and European markets.
Benchmark spot 62% iron ore SH-CCN-IRNOR62 was steady at $83.50 a tonne on Thursday, the weakest since Jan. 29 this year, data from SteelHome consultancy showed.
Australia’s Westpac Banking Corp is keeping its year-end iron ore price forecasts of $90 a tonne for 2019 and $65 for 2020.
“We expect prices to continue to decline in 2020 as supply recovers post Brazilian disasters, while demand subsides as Chinese property investment moderates,” said Justin Smirk, a Westpac senior economist.
* Also keeping iron ore demand in check, some Chinese steel mills and traders were seen destocking, said Darren Toh of steel and iron ore data analytics firm Tivlon Technologies, as they anticipated further declines in prices.
* China’s iron ore imports in October fell for the first time in four months as shrinking profit margins reduced demand for the raw material at steel mills.
* The most-traded construction steel rebar on the Shanghai Futures Exchange was down 0.8%, while hot-rolled steel coil, used in cars and home appliances, slipped 0.9%.
* Stainless steel lost 0.9%.
* Coking coal edged up 0.2% while coke inched down 0.1%.
* Chinese coal traders are holding off purchasing from overseas despite the upcoming heating season, as spreads between domestic and seaborne prices narrow and import rules tighten.
* China’s coal imports in October dropped 15.2% from a month earlier.
Source: Reuters (Reporting by Enrico dela Cruz, Editing by Sherry Jacob-Phillips)