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Dalian iron ore falls by 4% on high inventories, weak steel demand
[BEIJING] Chinese iron ore fell by 4 per cent to its lowest level since November on Monday as high inventory levels and a weak domestic steel market weighed on prices.
The most traded iron ore contract on the Dalian Commodity Exchange, for May delivery, fell 4 per cent to 465 yuan (S$97) a tonne by 0233 GMT, its lowest since Nov 16.
In Shanghai, the most-traded steel rebar contract, also for delivery in May, was down 2.5 per cent at 3,644 yuan a tonne, having earlier fallen to its lowest since Nov 20.
Zhao Xiaobo, an analyst at Sinosteel Futures in Beijing, said that iron ore prices were falling because of poor fundamentals and persistent high inventory levels as ongoing environmental restrictions on steel mills reduce demand.
China's top steelmaking city of Tangshan, in the northern Hebei province, said this month it would extend production restrictions on steel mills beyond the March 15 end of the winter heating season.
According to a survey by consultancy SteelHome, iron ore inventories at 47 Chinese ports stood at 159.18 million tonnes on March 16, having increased by 600,000 tonnes from the previous week.
"Shipments from mines are running high," Mr Zhao said, adding that demand for rebar from the real estate sector was weak.
Of the other steelmaking raw materials, coke was also down sharply on the Dalian exchange, tumbling by 2.8 per cent to 1,936.50 yuan a tonne and also touching its lowest since Nov 20. Coking coal slipped by 1.8 percent to 1,263 yuan a tonne.
German Chancellor Angela Merkel and Chinese President Xi Jinping on Saturday discussed overcapacity in world steel markets and agreed to work on solutions within the framework of the G20 group of industrialised nations..
Both countries are facing tariffs of their steel and aluminium shipments to the United States.