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MANILA: Dalian and Singapore iron ore futures tumbled on Friday, with growing fears of a deeper global economic downturn adding to lingering concerns about demand for the steelmaking ingredient in China.

Steel mills in China, the world’s biggest producer of the manufacturing and construction material, have idled dozens of blast furnaces recently in a bid to reduce high inventories amid weak domestic demand.

The production slowdown is also due to China’s resolve to continue reducing annual steel output in line with its decarbonisation goals.

Iron ore’s most-traded September contract on China’s Dalian Commodity Exchange ended morning trade 4.8% lower at 764 yuan ($113.95) a tonne, capping its weekly gain at less than 3%.

On the Singapore Exchange, iron ore’s front-month August contract slumped up to 4.1% to $114.10 a tonne. In the spot market, the benchmark 62%-grade material fell to $122 a tonne on Thursday from the previous day’s $124, wiping out its 2022 gains, SteelHome consultancy data showed. In China’s biggest steelmaking province Hebei, local media reported that some mills had opted to implement an annual overhaul of furnaces earlier than usual, citing no more extra room for additional stocks.

“It’s not just China where steel output is under pressure,” said Warren Patterson, head of commodities strategy at ING. “Expectations of slowing economic growth, and the growing risk of recession, are clearly not great for global steel demand.” Top iron ore producers Australia and Brazil are likely to ramp up supply, which may add downward pressure on prices, he said. Construction steel rebar on the Shanghai Futures Exchange was down 1.2% after six straight sessions of gains, while hot-rolled coil shed 1.3%. Stainless steel dropped 2%. Other steel inputs also slumped, with Dalian coking coal down 5% and coke falling 2.5%.—Reuters

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