BEIJING: Iron ore futures extended declines on Tuesday as mounting domestic supply and persistent demand concerns amid a lingering property slump dampened investor sentiment.
The most-traded January iron ore on China’s Dalian Commodity Exchange (DCE) ended daytime trading 0.69% lower at 862.5 yuan ($118.19) a metric ton, after falling 0.2% on Monday.
The benchmark October iron ore on the Singapore Exchange fell 0.87% to $120.7 a ton as of 0655 GMT, recouping some losses from earlier the session and staying above the psychological level of $120 a ton. “We see it as normal downward correction after touching the resistance level,” said Cheng Peng, a Beijing-based analyst at Sinosteel Futures.
“It’s risky to build long positions at a price range between $120 and $130 per ton.” Higher domestic supply weighed on the key steelmaking ingredient, with output of run of mine (ROM) totaling 659.17 million tons in the Jan-Aug period, up 7% year-on-year, data from the National Bureau of Statistics showed on Monday.
Concerns over the property market also persisted, despite a temporary relief after embattled Chinese developer Country Garden won approval from creditors to extend repayment on another onshore bond. However, other steelmaking ingredients extended gains, with coking coal and coke on the DCE climbing 1.1% and 0.3%, respectively, supported by tightening supply.
Some coking plants in north China’s Inner Mongolia raised offer prices for coke by between 100 yuan and 110 yuan per ton from Monday, consultancy Mysteel said in a report.
“Coking coal supply tightened due to safety checks in the major production hubs, lifting expectations of higher prices; meanwhile, demand (for coking coal and coke) remains robust amid lingering high level of hot metal output among steelmakers,” analysts at Huatai Futures said in a note. Steel benchmarks on the Shanghai Futures Exchange advanced. Rebar rose 0.29%, hot-rolled coil grew 1.31%, and wire rod added 0.49% Stainless steel, meanwhile, edged down 0.23%.
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