Posted on 26 Apr 2023
Dalian and Singapore iron ore futures fell to a more-than-four-month low on Tuesday as sluggish steel demand in China prompted mills to curb output, raising the possibility of an oversupply of the steel-making raw material.
The most-traded September iron ore on China’s Dalian Commodity Exchange DCIOcv1ended daytime trade 1.9% lower at 711 yuan ($102.85) a tonne, having earlier hit 710.50 yuan, its weakest since Dec. 20.
Iron ore’s benchmark May contract on the Singapore Exchange, dropped 0.8% to $103.05 a tonne. It earlier hit $102.35, its lowest since early December.
Some mills in top steel producer China now hurting from lacklustre steel demand and a slump in prices “have started to actively limit production”, Sinosteel Futures analysts said in a note.
According to industry consultancy and data provider Mysteel, some 52 of 126 blast furnaces in Tangshan, China’s top steelmaking city, have gone into maintenance.
Spot 62%-grade iron ore for delivery to China dropped to $110 a tonne on Monday, the lowest since early December, and down nearly 9% this week, according to SteelHome consultancy.
While China’s infrastructure investment rose 8.8% year-on-year in the first quarter, property investment fell 5.8%.
China’s infrastructure sector may continue to benefit this year from the projects initiated at the end of 2022, although growth may weaken in 2024 if no large-scale projects begin this year, the World Steel Association said in a quarterly report last week.
The country’s manufacturing sector is expected to show only a moderate recovery in 2023-2024, with slowing exports, the Brussels-based group said.
Rebar on the Shanghai Futures Exchange fell 1.6%, hot-rolled coil also shed 1.6%, while wire rod climbed 2.5% and stainless steel gained 0.4%.
Coking coal and coke on the Dalian exchange declined 1% and 2.3%, respectively.
Source:Reuters
