Iron ore crashes on economic gloom, supply pressures

IRON ore futures tumbled on Friday (Oct 28), with the steelmaking ingredient sinking below US$80 per tonne in Singapore and leading a ferrous market rout in China, spurred by a gloomy outlook for global steel demand and supply-side pressures.

The most-traded November iron ore on the Singapore Exchange fell as much as 3.6 per cent to US$78.80 a tonne, the lowest since 2020. It was down 2.2 per cent at US$79.90, as of 0801 GMT, and has fallen more than 50 per cent from its April peak above US$160.

On China’s Dalian Commodity Exchange, the most-active January contract ended daytime trade 4.9 per cent lower at US$86.31 a tonne, on track for its third consecutive weekly fall.

Spot iron ore, meanwhile, tumbled this week to the lowest since May 2020 below US$90 a tonne, as negative margins prompted Chinese steel mills to rein in output.

With weakening global steel demand and top steel producer China’s economy hit by Covid-19 curbs and property slump, analysts do not see a year-end rebound for steel and iron ore.

The International Monetary Fund said it does not expect a speedy resolution to the property turmoil in China.

Fresh Covid-19 lockdowns in China, expectations of further US interest rate hikes, and signs of increasing iron ore supply also added pressure on prices.

Australia’s Fortescue Metals Group reported a 4.2 per cent year-on-year rise in quarterly shipments, while Brazil’s Vale SA’s quarterly output grew 1.1 per cent.

“Weakness in the Chinese property market remains a headwind for steel and iron ore,” ANZ commodity strategists said in a note. “Supply-side issues have also weighed on the market.”

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Other steelmaking inputs also extended losses, with Dalian coking coal and coke down 2 per cent and 2.6 per cent, respectively.

Ferrous metals on the Shanghai Futures Exchange slumped, with rebar down 2.8 per cent, hot-rolled coil and wire rod dropped 3 per cent and 2.2 per cent, respectively. Stainless steel dipped 2.9 per cent. REUTERS