SHANGHAI: Iron ore futures wobbled on Friday while being on track for their second consecutive weekly fall due to mounting concerns about the steelmaking ingredient’s demand in top steel producer China.
China’s plan to cap domestic steelmakers’ output at 2022 levels added to such concerns, dragging down prices already pressured by lacklustre domestic steel demand at a time when construction activity is picking up.
Growing recession risks outside China have also clouded prospects for its steel exports.
The most-traded September iron ore on China’s Dalian Commodity Exchange ended morning trade 0.4% lower at 772 yuan ($112.91) a tonne, after a 2.3% slump on Thursday. It was on course for a weekly fall of more than 2%.
On the Singapore Exchange, benchmark May iron ore was up 0.1% at $116.55 a tonne, as of 0501 GMT, swinging between losses and gains during the morning session. For the week so far, it is down 0.8%.
“Iron ore extended its losses as China plans to cap steel production for 2023. This is in response to slower demand recovery and to curb emissions,” ANZ commodity strategists said in a note.
China though has not officially issued any statement about steel output curbs this year, but Bloomberg reported on Thursday the plan was expected to be released by the end of this month.
On the supply side, meanwhile, a category 5 storm that smashed into Australia’s northwest coast largely spared populated regions including the world’s largest iron ore export hub at Port Hedland.
Other steelmaking inputs on the Dalian exchange were firmer, with coking coal and coke up 0.3% and 1%, respectively.
On the Shanghai Futures Exchange, rebar rose 0.9%, hot-rolled coil climbed 1.1%, and stainless steel gained 0.6%, while wire rod slipped 0.3%.
Rebar spot and futures prices in China hit the lowest since December earlier this week amid weak demand, analysts said.
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