SINGAPORE: Iron ore futures extended declines on Friday with both benchmarks falling by more than 3% in early trade, dragged lower by steel output cuts and growing impatience on the lack of stimulus updates from China.
The most-traded September iron ore on China’s Dalian Commodity Exchange fell 3.5% to 827.5 yuan ($115.65) per metric ton as of 0330 GMT.
On the Singapore Exchange, the benchmark September iron ore was down 3.1% at $106.35 a metric ton.
“Chinese blast furnaces have slashed capacity utilisationand operating rates at pace in response to a confluence of government-mandated restrictions and the imminent arrival of typhoon Doksuri on China’s southern coast,” said Atilla Widnell, managing director at Navigate Commodities in Singapore.
Steel benchmarks on the Shanghai Futures Exchange fell. The most-active rebar contract dipped 0.4%, hot-rolled coil rose 0.5%, wire rod slid 0.1%, and stainless steel dropped 1.4%.
Industrial metals were also weighed down by strong US economic data which pushed the USD higher, analysts at ANZ said in a note.
“Iron ore’s rally over the last couple of months is looking increasingly brittle as hopes fade for the type of big-bang, infrastructure-heavy stimulus that China used to deploy,”
National Australia Bank said in a separate note.
China needs more effective implementation measures such as lower home mortgage rates and down payment ratios for first-time home buyers to help spur home purchases, state media quoted a Chinese official as saying.
Major iron ore miners saw falling profits this week. Vale SA posted a 78.2% year-on-year drop in its second-quarter net profit on Thursday, while Rio Tinto, slashed its interim dividend on Wednesday, reporting its lowest first-half underlying earnings in three years.
Comments
Comments are closed for this article.