Benchmark Dalian iron ore futures pulled back from a two-week high to finish flat after sluggish trade on Monday as the year-end holiday season prompted market participants to remain on the sidelines. The Dalian Commodity Exchange's most-traded iron ore contract, with May 2020 expiry, settled at 641.50 yuan ($91.86) a tonne, surrendering early gains from steel mills' restocking demand for the raw material.
On the Singapore Exchange, the front-month January contract also reversed early gains and was down 0.2% to $89.93 a tonne in afternoon trade. The pullback came after data showed imported iron ore inventory at China's ports climbed for the second week in a row.
Gains in steel futures, however, provided support to iron ore prices buoyed after data last week showed industrial profits in China grew at the fastest pace in eight months in November. Prices for spot cargoes of benchmark iron ore with 62% iron content for delivery to China settled at $92 a tonne on Friday, down from $93 a week ago, data from SteelHome consultancy showed.
Iron ore prices have pulled back after hitting a peak of $126.50 in July, based on SteelHome data. Shipments into top steel producer China have picked up in recent months, though iron ore prices are still on track to post an annual gain of around 140%, the best in three years. "Expect further pressure on iron ore prices in 2020," analysts at ING said in a note.
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