- As iron ore demand dips, portside inventory in China rose for a third straight week to 126.20 million tonnes as of Jan. 29, SteelHome data showed.
Iron ore futures fell to their lowest in nearly two months on Tuesday, as market participants turned cautious ahead of the week-long Lunar New Year holiday beginning on Feb. 11 in top steel producer China.
The most-traded May iron ore contract on China's Dalian Commodity Exchange slumped as much as 3.4% to 955.50 yuan ($147.89) a tonne, its weakest since Dec. 10.
The steelmaking ingredient's March contract on the Singapore Exchange tumbled as much as 6% to $142 a tonne, also its lowest since Dec. 10, though it quickly recovered to $148.40 by 0338 GMT.
"As things stand, we estimate $150 iron ore as the approximate average breakeven for Chinese steel production, which is where prices are right now," said Howie Lee, an economist at OCBC Bank in Singapore.
"With the various travel restrictions in Hebei and the impending Spring Festival, the market is naturally seeing some weakness in demand," he added, referring to China's top steelmaking province, where new clusters of COVID-19 cases have been detected.
Aside from the market's weak pre-holiday risk appetite, prices of steel products and inputs have come under pressure due to falling steel profit margins in China.
Iron ore prices are likely to stick close to $150 before a clearer picture on Chinese demand emerges after the holiday, Lee said.
Spot iron ore in China traded at $158 a tonne on Monday, the weakest since Dec. 15, based on SteelHome consultancy data.
As iron ore demand dips, portside inventory in China rose for a third straight week to 126.20 million tonnes as of Jan. 29, SteelHome data showed.
Mirroring the trend in spot markets, steel prices on the Shanghai Futures Exchange extended declines, with rebar down 1.7%, while hot-rolled coil dropped 1.3%. Stainless steel lost 1%.
Dalian coking coal slumped 1.5% while coke slid 1.9%.