MANILA: Iron ore futures fell on Friday as near-term demand prospects darkened in top steel producer China, which is battling its worst Covid-19 outbreak since March, but concerns over possible supply disruptions in key exporter Australia lent some support.
Iron ore on China’s Dalian Commodity Exchange ended daytime trading 0.5% lower at 1,046.50 yuan ($161.71) a tonne, surrendering early gains.
The steelmaking raw material lost 1% to $165.91 a tonne on the Singapore Exchange by 0707 GMT.
In a week that saw iron ore futures move sideways, the Dalian benchmark dropped 0.3%, while the Singapore front-month contract was on track for its first weekly loss of this year.
Moves this week highlighted the lack of conviction in a market worried about weakening steel margins and Covid-19 restrictions in China, while anticipating improved steel demand after the Lunar New Year holidays next month.
“While we still feel iron ore benchmarks are in a state of disequilibrium with global supply-demand fundamentals, paper markets are likely evaluating the impact of the recent Covid-19 outbreak in Hebei province on China’s steel production and iron ore consumption,” said Atilla Widnell, managing director at Navigate Commodities in Singapore.
Spot iron ore in China stayed firm above $170 a tonne, SteelHome consultancy data showed.
“We expect that markedly lower Australian iron ore shipments over the past three weeks and the tropical cyclone fast-approaching Port Hedland will continue to underpin iron ore prices in the near term,” Widnell said.
Indicating weak demand, total inventories of finished steel products, including construction steel rebar and hot-rolled coil, held by 184 Chinese mills monitored regularly by Mysteel consultancy grew 3.3% over Jan. 14-20 to 5.95 million tonnes.
Rebar on the Shanghai Futures Exchange fell 0.6%, while hot-rolled coil dipped 0.8%. Stainless steel slumped 2.5%.
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