SINGAPORE: Iron ore futures dropped on Monday, as the markets grew restless on the lack of substantial stimulus details from China, while concerns over long-term steel demand continued to linger.
The most-traded January iron ore on China’s Dalian Commodity Exchange was down 2% at 716.5 yuan ($99.64) per metric ton, as of 0330 GMT.
On the Singapore Exchange, the benchmark September iron ore was down 1.6% at $100.1 a metric ton.
China’s consumers and companies are tying up trillions of yuan in longer-dated deposits with banks, effectively taking a vast pool of money out of circulation and risking the kind of liquidity trap that hobbled Japan’s economy in the 1990s.
This is despite liquidity assurance pledges from state authorities at a press conference last Friday.
Support measures for China’s property sector failed to excite the iron ore market, ANZ analysts said in a note. China’s Zhengzhou city last Friday launched measures to support its property market, the first of such moves by a big city heeding signals from policymakers and the latest in a series of policy measures in recent weeks to support the economy as its post-pandemic recovery falters.
Falling steel demand forecasts also dampened trader sentiment.
This month will likely see China’s prices for imported iron ore dragged down by weakened demand among steelmakers and by mounting ore supplies at ports, Mysteel forecasts in its latest monthly report.
Steel benchmarks on the Shanghai Futures Exchange fell overall. The most-active rebar contract dipped 1%, hot-rolled coil slid 1.5%, wire rod lost 1.4%, and stainless steel was down 1.2%.
Steelmaking ingredients Dalian coking coal climbed 1.4%, while coke fell 0.1%.
Still, tighter iron ore supply last week helped alleviate some pressure on prices.
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