BEIJING: Iron ore futures slipped on Friday and were poised for a second straight weekly decline, weighed down by faltering demand in top consumer China, although pre-holiday restocking and rising bets of further stimulus limited the losses.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) was down 1.79% at 766 yuan ($104.95) a metric ton, as of 0238 GMT. The benchmark January iron ore on the Singapore Exchange fell 1.17% to $99.6 a ton by 0230 GMT.
Both benchmarks have fallen 1% so far this week after a more than 3% decline in the prior week. Revived hopes for more China stimulus had helped the market rise earlier this week.
Average daily hot metal output of Chinese steelmakers surveyed slid 0.7% week-on-week to 2.28 million tons in the week to Dec. 26, hitting the lowest level since late September and declining for a sixth straight week, data from consultancy Mysteel showed.
“Maintenances on blast furnaces and adjustment to production plans at steel mills are underway, so there is no surprise to see a persistent fall in hot metal output,” analysts at First Futures said in a note. “The pre-holiday replenishment of feedstocks may near its end... in the absence of more forceful stimulus, there is little motivation (for some investors) to build long positions.”
The Chinese New Year starts from Jan. 28 and domestic steelmakers usually build up stocks ahead of that to meet production needs during and after the holidays.
Other steelmaking ingredients on the DCE lost ground, with coking coal and coke down 1.26% and 2.15%, respectively. Steel benchmarks on the Shanghai Futures Exchange were hit by diminishing demand. Rebar lost 0.88%, hot-rolled coil shed 0.61%, wire rod fell 0.56% and stainless steel dipped 0.23%.
Profits among steelmakers slid by 83.7% to 7.86 billion yuan in the first 11 months of the year, data from the National Bureau of Statistics showed.
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