MANILA: Dalian iron ore futures were trapped in a tight range while the Singapore benchmark slipped on Wednesday, pressured by concerns about demand prospects for the steelmaking raw material in top steel producer China.
The most-traded September iron ore on China’s Dalian Commodity Exchange eked out a gain of 0.1% to end the morning session at 1,211 yuan ($187.16) a tonne.
Iron ore’s most-active August contract on the Singapore Exchange dropped 0.8% to $208.55 a tonne.
“There are early signs of a turning point in Chinese demand with falling Chinese steel prices crushing margins for steel mills,” said Justin Smirk, a senior economist at Westpac in Sydney.
Declining cement prices in China, some rebar makers possibly starting to incur losses, and excavator sales in May posting the first monthly drop since early 2020 point to slowing construction activity that has also been hampered by an unfavourable weather, Smirk said.
China’s steel exports also remained weak, hit by tepid demand in Southeast Asian countries - its largest buyers of the construction and manufacturing material - due to a fresh wave of COVID-19 infections in the region, Mysteel consultancy reported.
Concerns about China’s efforts to curb steel output this year to meet its carbon emissions goal also kept market participants largely at bay, even as worries persisted over the tightness in global iron ore supply.
Iron ore supply constraints, meanwhile, kept spot prices underpinned, with the support particularly stronger for high-grade materials, as China’s intense emission-control campaign pushed steel producers to top-quality ore.
Higher-quality iron ore produces more steel for each tonne that is processed, and can reduce blast furnace emissions.
Construction steel rebar on the Shanghai Futures Exchange rose 0.9%, while hot-rolled coil jumped 1.2%. Stainless steel climbed 2.8%.
Dalian coking coal advanced 2.8% and coke gained 1.9%.
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