Iron ore extends slump on improved supply outlook, soft China demand
Dalian and Singapore iron ore futures slumped on Monday, extending last week’s losses, pressured by prospects of improved supply and weakening Chinese demand.
The most-traded iron ore for January 2022 delivery on China’s Dalian Commodity Exchange ended daytime trading 4.4% lower at 852.50 yuan ($131.67) a tonne, after earlier hitting 845 yuan, the lowest since April 1.
The steelmaking ingredient’s most-active September contract on the Singapore Exchange was down 4.3% at $160.70 a tonne by 0712 GMT.
“With the prospect of lower blast furnace iron output in the second half versus H1 2021, and rebounding Aussie and Brazil iron ore shipments, we maintain our medium-term target range (at) $140-$170/tonne CFR China,” said Atilla Widnell, managing director at Navigate Commodities in Singapore.
The spot price of benchmark 62%-grade iron ore bound for top steel producer China traded at $175 a tonne on Friday, hovering around a near four-month low of $174.50 hit the day before, SteelHome consultancy data showed.
Iron ore prices have collapsed since hitting record highs in May, with the sell-offs particularly strong in the last three weeks as concerns grew over China’s resolve to reduce steel output in line with its de-carbonisation drive.
Sentiment was also hit by data on Saturday showing China’s export growth unexpectedly slowed in July following outbreaks of COVID-19 cases.
The highly infectious Delta variant has been detected in more than a dozen Chinese cities since July 20.
“The challenge lies in how long it will take China to bring the outbreak under control and reinstate the country’s free movement of goods, services and people,” Widnell said.
Construction steel rebar on the Shanghai Futures Exchange SRBcv1 slipped 0.9%, while hot rolled coil SHHCcv1 lost 0.4%.
Source: Reuters (Reporting by Enrico Dela Cruz in Manila; Editing by Ramakrishnan M. and Rashmi Aich)