Dalian iron ore falls on lingering property woes

Dalian iron ore futures dropped on Friday as property woes in China continued to linger and on news of a limit on trading volumes, though losses were limited by signs of recovering steel demand.

The most-traded January iron ore on China’s Dalian Commodity Exchange DCIOcv1 fell 0.4% to 963.5 yuan ($132.96) per metric ton at closing, but gained 1.4% this week, recording its fifth consecutive week of gains.

On the Singapore Exchange, the benchmark December iron ore SZZFZ3 was down 2.2% at $130.96 a ton. However, the contract has risen 3.3% so far in the week, heading for its fourth straight weekly gain.

China’s new home prices fell for a fourth month in October, official data showed on Thursday, as government support measures did little to lift the gloom hanging over the country’s consumers and its debt-laden property sector.

“The National Development and Reform Commission (NDRC) is investigating what they consider to be “unreasonably high” prices and the Dalian has adjusted iron ore futures trading limit,” Atilla Widnell, managing director at Navigate Commodities, said on Thursday.

State-backed Dalian Commodity Exchange on Wednesday set a limit on daily trading volumes for iron ore futures at no more than 500 lots on contracts for January to May 2024 delivery.

“Recent data from the China Iron and Steel Association (CISA) shows that … crude steel production at major mills increased by 2.4% from late October to 1.97mt/d in early November, as some mills ramped up production this month amid improving profit margins and strengthening steel prices,” analysts from ING said in a note.

Steel benchmarks on the Shanghai Futures Exchange were mostly down. The most-active rebar contract SRBcv1 last traded flat, hot-rolled coil SHHCcv1 fell 0.1%, wire rod SWRcv1 decreased 0.2%, and stainless steel SHSScv1 lost 1.3%.

Other steelmaking ingredients Dalian coking coal DJMcv1 and coke DCJcv1 inched up 1.2% and 0.7%, respectively.
Source: Reuters (Reporting by Ashley Fang; Editing by Subhranshu Sahu and Sohini Goswami)