Iron ore futures in China and Singapore edged lower on Thursday as trading activity winds down ahead of the New Year holiday, but a rebound in steel prices kept the raw material's losses in check. Dalian Commodity Exchange's most-traded iron ore contract, with May 2020 expiry, ended down 0.3% at 639.50 yuan($91.39) a tonne. The contract fell as much as 2% - its weakest since December 9.
On the Singapore Exchange, the front-month January contract slipped as much as 1.5% to $88.65 a tonne in subdued trading. "There's not much activity from steel mills this week. We may see prices heading further southwards ahead of the New Year holiday," a Shanghai-based trader said.
Weak demand for the steelmaking raw material also weighed on prices, with heavy-pollution alerts in some of China's steel production hubs prompting mills to limit operations, and margins coming under pressure after peaking earlier this month.
Commodities broker Marex Spectron is bearish on iron ore's overall supply conditions and short-term demand view. "Previously tighter forward supply conditions continue to abate and we expect that to persist till (the first week of) 2020," said Marex research analyst Hui Heng Tan.
"This can be further validated by the expected pickup in imports arriving into China in the short term. These are all price negative developments," Tan said.
Shanghai steel futures, however, clawed back some ground after losses in the last two sessions, as prospects of a boost in steel demand brightened somewhat following a report saying China was planning major infrastructure investments in 2020.
The world's biggest steel producer and consumer is planning investments of 800 billion yuan in railways, 1.8 trillion yuan in highway and waterway infrastructure and 90 billion yuan in civil aviation, state radio said, citing Minister of Transport Li Xiaopeng.
The most-traded construction steel rebar on the Shanghai Futures Exchange closed up 0.7%, while hot-rolled steel coil, used in cars and home appliances, rose 0.4%. Dalian coking coal lost 0.9%, but Dalian coke gained 0.3%. Shanghai stainless steel futures were virtually flat.
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