MANILA: Singapore iron ore futures briefly traded below $120 a tonne on Wednesday, while the Dalian benchmark swung between losses and gains, as traders reassessed near-term demand prospects in top steel producer China.
Benchmark March iron ore on the Singapore Exchange fell as much as 2.5% to $118 a tonne, its weakest since Jan. 17. On China’s Dalian Commodity Exchange, the steelmaking ingredient’s most-active May contract was up 0.2% at 844 yuan ($124.52) a tonne, as of 0303 GMT, after earlier falling 1.1% to 833 yuan.
China’s stepped-up policy support for its ailing property sector and dismantling of strict COVID-19 restrictions had pushed iron ore and steel prices to multi-month highs in January. “Prospects of strong iron ore demand due to China’s reopening and various supportive measures for the property market are well reflected in the recent price rally in iron ore,” ANZ commodity strategists said in a note.
“Nevertheless, property market indicators are still subdued. While recent developments are boding well for demand, we expect iron ore prices to consolidate before seasonal demand kicks in.” Increasing portside iron ore inventory in China, which as of last week was the biggest since December based on SteelHome consultancy data, also weighed on prices, analysts said.
Meanwhile, iron ore shipments from top suppliers Australia and Brazil grew by a hefty 3 million tonnes, or 13.7%, to 24.5 million tonnes over Jan. 30-Feb. 5, after a slump in the prior week, according to Mysteel consultancy data. The real recovery in Chinese iron ore demand could be seen in the second quarter, analysts said. Other Dalian steelmaking inputs were firmer, with coking coal up 0.7%, while coke gained 1%. Steel benchmarks were also firmer, with rebar on the Shanghai Futures Exchange up 0.6%, hot-rolled coil gaining 0.9%, wire rod climbing 0.7%. Stainless steel edged down 0.1%.
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