BEIJING: Iron ore drifted lower on Tuesday, as caution dominated among traders after the latest manufacturing data in the world’s second-largest economy missed expectations.
The benchmark November iron ore on the Singapore Exchange was 0.71% lower at $120.85 a metric ton, as of 0200 GMT. The most-traded January iron ore on China’s Dalian Commodity Exchange (DCE) nudged down 0.06% to 895 yuan ($122.32) a ton, as of 0210 GMT, after touching the psychological level of 900 yuan a ton a day before. China’s manufacturing activity unexpectedly contracted in October when the official purchasing managers’ index (PMI) fell to 49.5, dipping back below the 50-point level, demarcating contraction from expansion and missing a forecast of 50.2.
Also, the PMI in China’s steel industry slid to 45.6 in October from 45.8 previously, data from China Logistics Information Centre showed, forecasting steel output to contract further in November, citing a typical production restriction in winter and pressure from continuously narrowing steel margins.
Sending further downward pressure to the market is also fear of intervention from relevant government bodies, following a rally in prices, analysts said.
But there are also growing supply risks-potential strike action in Australia, analysts at ING bank said in a note, pointing to the approval of industrial action plans among nearly 350 BHP iron ore rail workers that could include work stoppages of up to 24 hours.
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