MANILA: Iron ore futures in China extended losses to a third straight session on Wednesday, hitting the lowest level in more than four months, as unfavourable weather in several Chinese cities added to the gloomy demand outlook for steel and its inputs.
The most-traded iron ore, for September delivery, on China’s Dalian Commodity Exchange ended morning trade 1.3% lower at 712 yuan ($105.98) a tonne, after earlier falling to 693 yuan, the weakest since Feb. 28.
But support emerged for the steelmaking ingredient on the Singapore Exchange after slumping on Tuesday to its lowest level this year at $104.10 a tonne.
As of 0337 GMT, the front-month August SGX contract was up 1.7% at $106.75. In the spot market, the benchmark 62%-grade iron ore bound for China touched seven-month-low $107 a tonne on Tuesday, SteelHome consultancy data showed.
Scorching heat in some cities and relentless rains in other parts of China may linger for days and further disrupt activity in the world’s biggest steel producer. Bad weather usually slows construction activity, making it more difficult for steel mills to recover from depressed margins caused by weak demand and high inventories.
They have already opted to curb production in recent week. And with no respite seen from COVID-19 curbs, markets are shrugging off talks of stumulus measures to shore up the flagging domestic economy. “(China’s) zero-COVID strategy is raising concerns that even the huge fiscal stimulus package the government is preparing will have little impact on demand for steel and iron ore amid the ongoing restrictions,” said Daniel Hynes, ANZ senior commodity strategist.
Rebar on the Shanghai Futures Exchange slumped 3.5% to its lowest since Nov. 19, while hot-rolled coil fell 3.6% to its weakest since December 2020. Stainless steel rose 0.6%. Dalian coking coal shed 4.5%, while coke lost 3.9%, touching their lowest since Jan. 25.