Iron ore subdued as traders ponder extent of China stimulus
DALIAN and Singapore iron ore futures struggled for momentum in early trade on Wednesday (Jun 21) as traders assessed how far top steel producer China might go in providing support for its faltering economic recovery.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange was up 0.3 per cent at 807.50 yuan (S$151) per metric tonne, as of 0215 GMT.
On the Singapore Exchange, the steelmaking ingredient’s benchmark July contract shed 0.2 per cent to US$112.80 per metric tonne.
Both Dalian and Singapore benchmarks retreated on Tuesday from a more than two-month high, as modest cuts in China’s loan prime rates disappointed traders hoping for broader support, particularly for the weak property sector.
China’s five-year loan prime rate, which serves as mortgage reference rate, was cut by just 10 basis points.
“This lower-than-expected cut, combined with no firm announcements of a sizeable stimulus package after last Friday’s State Council meeting, despite much media hype, has left many wondering how willing China is to stimulate its economy,” said National Australia Bank head of market economics Tapas Strickland.
Steel output in China is expected to fall further to align with the softness in the real estate sector, ANZ Research said in its quarterly outlook. “This will in turn weigh on iron ore demand, just as supply disruptions ease,” it noted.
The total volume of iron ore dispatched from the 19 ports and 16 mining companies in Australia and Brazil jumped after last week’s decline, consultancy Mysteel’s latest survey found. Shipments during Jun 12-18 rose 2.6 million tonnes, or 10 per cent, on week to 28.6 million tonnes, hitting their highest since December 2020, the survey showed.
Rebar on the Shanghai Futures Exchange dipped 0.4 per cent, hot-rolled coil dropped 0.3 per cent, wire rod shed 0.7 per cent, while stainless steel edged up 0.2 per cent. Coking coal and coke on the Dalian exchange gained 0.1 per cent and 0.5 per cent, respectively. REUTERS
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