BEIJING: Iron ore futures prices extended declines for a third consecutive session on Monday as some investors unwound long positions to cash in profits amid contracting demand and steel margins.
The most-traded May iron ore on China’s Dalian Commodity Exchange (DCE) fell 1% to 993.5 yuan ($138.93) a metric ton, as of 0215 GMT.
The benchmark February iron ore on the Singapore Exchange was 0.71% lower at $137.6 a ton.
“It’s expected hot metal output will hover at a relatively low level with many mills still suffering losses, which will weigh on demand for iron ore,” analysts at Soochow Futures said in a note.
The expectation that mills will return to the spot market for restocking raw materials to meet production needs over the week-long Lunar New Year holiday break, however, capped losses, said analysts.
Iron ore prices are set to remain volatile as the market continues to respond to any policy change from Beijing with any further recovery in prices dependent on economic stimulus from China, analysts at ING bank wrote in a note.
Iron ore slips on weak near-term demand
“The downside risk for 2024 is if the stimulus effect is weaker than expected,” they added.
Other steelmaking ingredients on the DCE also posted losses, with coking coal and coke down 2.16% and 2.3%, respectively.
Lower raw materials prices pushed steel benchmarks on the Shanghai Futures Exchange down. Rebar lost 1.1%, hot-rolled coil shed 1.05%, wire rod dipped 0.62% and stainless steel edged down 0.33%.
“Steel fundamentals are weak as even though a mild reduction is seen from the supply side, the seasonally sluggish demand and higher production costs squeezed steel margins,” said Kevin Bai, a Beijing-based analyst at consultancy CRU Group.
“We expect the weak supply and demand in steel market to likely last till the Lunar New Year holiday break.”
Comments
Comments are closed for this article.