Iron ore dips on growing supply, worries of more regulation
DALIAN and Singapore iron ore futures fell on Thursday (Apr 20) on increasing supply of the steelmaking ingredient and lower-than-expected steel output, amid lingering concerns over China’s warning on price hikes.
China’s state planner said at a regular briefing that it will closely monitor iron ore market dynamics and take steps to limit price hikes. Leading iron ore supplier Rio Tinto on Thursday reported a better-than-expected 15.4 per cent jump in first-quarter iron ore shipments from Western Australia, as it ramped up production at its Gudai-Darri mine.
Brazilian miner Vale on Tuesday posted a 5.8 per cent year-on-year increase in first-quarter iron ore production, boosted by its key S11D project.
The most-traded September iron ore on the Dalian Commodity Exchange (DCE) ended daytime trading 2.62 per cent lower at a two-month low of 761.5 yuan (S$147.57) a tonne.
On the Singapore Exchange, the benchmark May iron ore was down 1.5 per cent at a three-month trough of US$115.6 a tonne, as of 0700 GMT.
“Australian supply has seen limited impact from cyclone Ilsa, with Port Hedland re-opened and no year-on-year change on March volumes,” analysts at National Australia Bank said in a note.
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“Indian iron ore exports continued improvement in the first quarter, adding further downward pressure to iron ore prices,” they added.
Meanwhile, the steeper-than-expected fall in weekly steel output also weighed on sentiment, Pei Hao, a senior analyst at the international brokerage firm FIS told Reuters.
Production of construction steel products including rebar and wire rod declined by 3.81 per cent to 4.1 million tonnes in the week as of April 20, data from consultancy Mysteel showed.
Other steelmaking ingredients including coking coal and coke fell sharply, pressured by growing supply and subdued demand. Coking coal tumbled 4.36 per cent to a five month-low of 1,525.5 yuan a tonne and coke declined 3.45 per cent.
Weakening raw materials prices dragged down steel futures. Rebar on the Shanghai Futures Exchange dropped 0.66 per cent to 3,914 yuan a tonne, and hot-rolled coil fell 1.27 per cent.
Wire rod nudged up 0.09 per cent and stainless steel rose 0.39 per cent. REUTERS
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