Iron ore dips to multi-week lows as fundamentals weaken
Iron ore futures slumped for a third session on Thursday on growing prospects of further improvement in supply of the steelmaking ingredient and signs that steel demand in China has not been as strong as expected.
Iron ore on China’s Dalian Commodity Exchange closed 2.7% lower at 790 yuan ($116.67) a tonne, its weakest finish since July 31.
It fell as much as 2.5% at $116.65 on the Singapore Exchange , the lowest level since August 31.
Last week, imported iron ore stocked at Chinese ports hit the highest level since April, SteelHome consultancy data showed, even as Australia and Brazil ramped up shipments.
Australia’s iron ore shipments to China from the hub of Port Hedland rose 5.2% to 40.2 million tonnes in August from the previous month, Refinitiv data showed.
Against the backdrop of easing concerns about supply tightness, Brazilian iron ore miner Vale SA is looking to expand its annual output capacity to 450 million tonnes from a current rate of 318 million tonnes.
Brazil’s daily iron ore exports averaged 2.17 million tonnes in the first eight business days of September, compared with 2 mt/d in the first four days, according to ANZ.
Current steel demand in China has failed to meet expectations, analysts said, helping spark sell-offs in ferrous futures, which dragged spot prices lower.
“In the summer, the market had strong expectations for (steel demand to improve during) the fall,” Sinosteel Futures analysts wrote in a note.
“However, neither the weekly steel data from last week nor the recent real estate data released in August have fully demonstrated strong demand,” they said.
Construction steel rebar on the Shanghai Futures Exchange dipped 0.3%, set for its first monthly fall since February.
Hot-rolled coil dropped 0.7% while stainless steel slumped 0.9%.
Coking coal rose 0.5% but coke slipped 0.2%.
Source: Reuters (Reporting by Enrico dela Cruz, Editing by Sherry Jacob-Phillips and Uttaresh.V)