Iron ore slumps to three-week low on China demand worries
Dalian iron ore fell for a fifth straight session on Thursday and hit its lowest in three weeks, dragged down by a pessimistic demand outlook for the steelmaking ingredient from top steel producer China.
The most-traded iron ore for September delivery on China’s Dalian Commodity Exchange ended daytime trade 2.5% lower at 867.50 yuan ($129.35) a tonne, after earlier falling to 861.50 yuan, its weakest since May 26.
On the Singapore Exchange, the front-month July contract gave up early gains and was down 0.5% at $128.80 a tonne by 0717 GMT. It touched $127.70 earlier in the session, the weakest since May 27.
Other steel inputs fell more sharply, with Dalian coking coal tumbling 6.2% and coke DCJcv1 slumping 5.5%.
Several factors have clouded steel demand prospects in China, such as the rainy season that usually disrupts construction activity, restrictions put in place to contain COVID-19 outbreaks, and weak profits at steel mills.
“Steel inventory is rising, and prices are falling. The spot price of rebar fell to the lowest level in 15 months,” analysts at Westpac said in a note.
Wednesday’s data showing signs of an economic recovery in China last month failed to ease concerns about demand, with the pessimism gripping the futures markets also weighing on spot prices of iron ore.
Benchmark 62%-iron ore’s spot price in China was assessed at a three-week low of $133 a tonne on Wednesday by SteelHome consultancy.
After ramping up crude steel production last month, Chinese mills’ average daily output over June 1-10 fell 1.3% from the same period in May, Mysteel consultancy said, citing data from the China Iron & Steel Association.
Construction steel rebar on the Shanghai Futures Exchange dropped 1.9%, while hot-rolled coil dipped 1.6%. Stainless steel edged up 0.2%.
Source: Reuters (Reporting by Enrico Dela Cruz in Manila; Editing by Subhranshu Sahu)