SINGAPORE: Iron ore futures prices eased on Friday and were set for modest weekly losses on a strengthening dollar and slowing demand for the steelmaking material in top consumer China.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) fell 0.28% to 725 yuan ($100.67) a metric ton, as of 0301 GMT. The contract has lost 0.55% so far this week.
The benchmark June iron ore on the Singapore Exchange was 0.2% lower at $98.8 a ton, losing 1.26% so far this week.
“The inventories of finished steel products held by traders across China…decreased for a second week during May 16-22, thinning by 398,500 tonnes on week,” consultancy Mysteel said in a note.
The pace of the fall in stocks has slowed as demand from end-users contracted amid a mix of rains and hot weather across China, according to Mysteel.
On the demand side, three new blast furnaces resumed production and six blast furnaces were overhauled, said broker Everbright Futures in a note.
Hot metal output, typically used to gauge iron ore demand, decreased by 11,700 tons month-on-month to 2.436 million tons in May, Everbright added.
“Supply growth has evaporated as producers remain wary of weak demand and are increasing their use of steel scrap,” said ANZ analysts.
“This should limit the downside in iron ore prices.”
Also pressuring prices was a stronger US dollar, which gained on Thursday after three days of losses, making dollar-denominated assets less affordable to holders of other currencies.
Other steelmaking ingredients on the DCE languished, with coking coal and coke down 2.87% and 1.31%, respectively.
Most steel benchmarks on the Shanghai Futures Exchange lost ground.
Rebar eased 0.1%, hot-rolled coil and wire rod both ticked down around 0.2%, while stainless steel was up 0.27%.
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