Home / Commodities / Commodity News / China, Singapore iron ore sell-offs intensify on demand concerns

China, Singapore iron ore sell-offs intensify on demand concerns

Benchmark Dalian and Singapore iron ore futures fell on Thursday as China’s rapidly rising steel inventories amid weakening demand fuelled worries that mills will keep their purchases of the steelmaking raw material to a minimum for some time.

Extending its losses into the third straight day, iron ore on the Dalian Commodity Exchange declined 3.6% at 633 yuan ($90.26) a tonne. Futures on the Singapore Exchange were down 2.3% at $83.91 in afternoon trade.

Steel stockpiles in China have piled up, rising 173% since the start of the year to 21.6 million tonnes overall, according to ANZ Research.

Inventories rose as output from the world’s top steel producer climbed 7.2% year on year in January, while downstream demand was sluggish due to Lunar New Year holiday shutdowns and restrictions China imposed to contain a coronavirus outbreak.

Steel mills and iron ore suppliers are pinning their hopes of a recovery in steel demand on policy support China has rolled out and possible additional measures to counter the economic fallout from the epidemic.

However, with the growing risk the coronavirus outbreak could turn into a pandemic, a rebound in steel demand in the near term is in doubt, meaning inventories may remain high.

“With the promise of infrastructure stimulus measures, (steel mills) are likely to keep producing for the moment,” said Daniel Hynes, ANZ’s senior commodity strategist, in a note.

“If there is no rebound in industrial activity by the end of the quarter, we suspect lower steel production and thus iron ore demand will be hit.”

FUNDAMENTALS
* Mills in China’s steelmaking hubs of Tangshan and Handan in the northern province of Hebei face fresh anti-smog restrictions on their sintering operations, based on reports from industry websites.

* The head of Japan’s steel industry urged Chinese steelmakers to cut production to reflect weakening demand from manufacturers.

* China’s steel output is expected to fall in coming months due to the impact of the coronavirus outbreak, analysts said.

* A ship heading to China and carrying 275,000 tonnes of iron ore from Brazilian miner Vale SA was damaged.

* Construction steel rebar on the Shanghai Futures Exchange was down 1.3%, hot-rolled coil slipped 0.9% and stainless steel shed 0.8%.

* Coking coal lost 0.6% and coke slid 2.7%.
Source: Reuters (Reporting by Enrico dela Cruz; additional reporting by Min Zhang in Beijing; Editing by Amy Caren Daniel & Shri Navaratnam)

Recent Videos

Hellenic Shipping News Worldwide Online Daily Newspaper on Hellenic and International Shipping