Dalian iron ore falls on weakening steel market; focus on Third Plenum

Dalian iron ore futures prices extended losses on Thursday, dragged down by the weakening steel market in top consumer China, while investors awaited details of likely stimulus measures from Beijing’sThird Plenum.

The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trade0.9% lower at 811.5 yuan ($111.86) a metric ton.

It hit an intraday low of 798 yuan a ton earlier in the session, its lowest since June 26.

The benchmark August iron ore on the Singapore Exchange was, however, up 0.67% at $105.65a ton, as of 0720 GMT.

Steel benchmarks on the Shanghai Futures Exchange were pressured by lacklustre demand constrained by temperature and heavy rains in some regions.

Rebar and hot-rolled coil lost about 0.8%, wire rod SWRcv1 shed nearly 1.2%and stainless steel SHSScv1 dipped about 0.2%.

Daily transaction volumes of construction steel products shrank by 18% from Tuesday to 95,300 tons on Wednesday, data from consultancy Mysteel showed.

China’s property downturn comes as the steel industry enters its quieter summer period when demand tends to weaken, ANZ analysts wrote in a note. The property sector is a key user of steel in China.

Investors and traders are still awaiting details on possible stimulus from the third plenum meeting of top leaders that is scheduled to end on Thursday.
Beijing is not expected to offer new measures that will lead to an increase in domestic demand from the property sector, the ANZ analysts said.

Nevertheless, iron ore prices are not expected to collapse, as stronger investment in social housing and infrastructure together with growth in the manufacturing, machinery, and shipping sectors should lift China’s steel consumption, added ANZ.
Other steelmaking ingredients on the DCE lost ground, with coking coal DJMcv1 and coke DCJcv1 down about 0.5% and 2%, respectively.
Source: Reuters