Iron ore futures down as China demand concerns grow
IRON ore futures slumped on Thursday (Apr 13) as pessimism over steel demand in China prevailed, even as traders monitored a strong cyclone that could disrupt shipments of the steelmaking ingredient from top supplier Australia.
Weakening steel prices in China indicated lacklustre demand at a time when construction activity in the top iron ore consumer is picking up. Rising recession risks have also clouded prospects for Chinese steel exports, analysts said.
China’s unconfirmed plan to limit annual crude steel output, as it seeks to curb iron ore price speculation, has also been a drag on the market.
China is set to release a plan capping domestic steelmakers’ output at 2022 levels, Bloomberg reported on Thursday.
The most-traded September iron ore on China’s Dalian Commodity Exchange ended daytime trade 3.1 per cent lower at 769 yuan (S$148.29) a tonne.
On the Singapore Exchange, iron ore’s benchmark May contract was down 2.3 per cent at US$115.55 a tonne, as of 0702 GMT.
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“Iron ore is facing price control pressure, and policy risks continue to increase,” Sinosteel Futures analysts said in a note.
Meanwhile, Port Hedland in Australia’s northwest region, braced on Thursday for Cyclone Ilsa, the area’s most powerful tropical cyclone in a decade, potentially disrupting supply and providing support to iron ore prices.
Port Hedland is the world’s biggest export point for iron ore.
Expectations of stronger domestic steel demand this year had prompted China to ramp up iron ore imports in January to March, which surged nearly 10 per cent from a year earlier to a record first-quarter volume.
Coking coal and coke on the Dalian exchange both rose 0.4 per cent.
On the Shanghai Futures Exchange, rebar fell as much as 1.5 per cent to its lowest since Dec. 20, while hot-rolled coil dipped 1.9 per cent to its weakest since Feb. 3. Wire rod dropped 1.7 per cent and stainless steel shed 0.6 per cent. REUTERS
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