Dalian iron ore slumps as China economic data dents appetite
DALIAN iron ore futures slipped on Tuesday (Jan 17) after data showed that China’s economic growth in 2022 slumped to one of its worst levels in nearly half a century.
The top-traded May iron ore on China’s Dalian Commodity Exchange ended day trade 1.3 per cent lower, at 835 yuan (S$163.06) a tonne. On the Singapore Exchange, the benchmark February iron ore was up 0.5 per cent, at US$120 a tonne as at 0700 GMT.
China’s fourth quarter was hit hard by strict Covid-19 curbs and a property market slump, raising pressure on policymakers to unveil more stimulus this year. The country’s property investment fell 9.8 per cent in the first 11 months of 2022; full-year data showed a decline of 10 per cent year on year.
The top steel producer’s output rose 4.5 per cent in December 2022 from the month before. This came as demand for the material increased with stepped-up government support for the property sector.
It is perhaps not surprising that China’s National Development and Reform Commission (NDRC) is making further moves to cap iron ore prices, said commodities broker Marex. After an earlier announcement that the NDRC would ramp up efforts to regulate the prices of iron ore and crack down on malicious speculation in the metal, iron ore still managed to rally over 6 per cent.
Market players are awaiting the outcome of an NDRC meeting that started at 0630 GMT on Tuesday.
Losses in Asian shares widened on Tuesday, after China reported weak fourth-quarter economic data. But investor expectations for a strong rebound in the country remained high, even as concerns about a global recession grew.
The most active rebar contract on the Shanghai Futures Exchange edged 0.2 per cent higher. Hot-rolled coil inched up 0.1 per cent, wire rod rose 0.9 per cent, and stainless steel climbed 1 per cent.
Dalian coking coal dipped 0.7 per cent, while coke rose 1.1 per cent. In a research note, Huatai Futures said that while the demand and inventory levels of coking coal and coke were similar, the supply of coking coal was greater than that of coke, leading to its weaker price performance. REUTERS
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