Iron ore slides to over one-week low on lingering China demand concerns

Iron ore futures prices extended losses on Wednesday to their lowest levels in more than one week, pressured by persistent concerns about demand in top consumer China amid a lack of significant policy measures to boost steel uptake.

The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trade 3.53% lower at 805.5 yuan ($111.43) a metric ton, the lowest since Mar. 19.

The benchmark April iron ore SZZFJ4 on the Singapore Exchange was 2.1% lower at $101.95 a ton, as of 0754GMT, the lowest sinceMar. 18.

“A weak steel price and thin steel margins, coupled with high ore shipments, have suppressed ore demand and prices,” Cheng Peng, a Beijing-based analyst at Sinosteel Futures, said.

Average daily hot metal output in April is expected at between 2.25 million and 2.26 million tons, much lower than the 2.45 million tons in the same period a year before, analysts at consultancy Mysteel said in a research note on Tuesday.

Pressure on ore prices from the supply side persisted in the short term as both overseas ore shipments and domestic ore arrivals rebounded this week, analysts at Huatai Futures said in a note.

“Also, there is an expectation of more shipments from Australia and Brazil with the approaching of the end of this quarter,” they said.

The persistent weakness came despite better-than-expected industrial data.

Profits at China’s industrial firms jumped 10.2% in the first two months from the same period last year, following a 2.3% profit decline for the whole of 2023, official data showed on Wednesday.

Other steelmaking ingredients on the DCE also retreated further, with coking coal DJMcv1 and coke DCJcv1 down 4.24% and 3.36%, respectively.

Lower raw material prices and soft demand dragged down most steelbenchmarks on the Shanghai Futures Exchange.

Rebar SRBcv1 lost 1.97%,hot-rolled coil SHHCcv1 shed 1.72%, wire rod SWRcv1 fell 1.76% while stainless steel SHSScv1 added 0.45%.

“Steel demand is currently much weaker than the same period a year before, and a destock is slow,” Sinosteel’s Cheng said.
Source: Reuters (Reporting by Amy Lv and Andrew Hayley; Editing by Mrigank Dhaniwala and Janane Venkatraman)