MANILA: Iron ore futures dipped to six-week lows on Tuesday, dragged lower by concerns about looming steel production cuts in China and uncertainty over the country’s struggling property sector.
Other steelmaking ingredients were also under heavy pressure from worries about Chinese demand, with both coking coal and coke sliding by more than 5%.
The most-traded January iron ore on China’s Dalian Commodity Exchange ended morning trade 1.7% lower at 819 yuan ($112.40) per metric ton, having hit its weakest since Aug. 30 earlier in the session at 812.50 yuan.
The steelmaking ingredient’s benchmark November contract on the Singapore Exchange dropped as much as 2.6% to $109.45 per ton, its lowest also since Aug. 30.
“Sentiment remained downbeat amid a broader weakness in construction activity” in China, ANZ said in a note. “Unfavourable margins have also raised the prospect of steel production cuts during winter.” News highlighting the deepening property sector crisis in top steel producer China also kept traders cautious.
China’s largest private property developer, Country Garden Holdings, said it might not be able to meet all of its offshore payment obligations when due or within the relevant grace periods. Coking coal on the Dalian exchange sank 6%, while coke slumped 5.8%.
“We do expect the supply situation to improve and demand to ease as Chinese steel production moderates,” Westpac said in its monthly outlook for metallurgical coal.
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