Iron ore extends decline

BEIJING: Iron ore futures fell on Tuesday for a fourth consecutive session, albeit at a slower pace, as steelmakers in top consumer China remained cautious on pre-holiday restocking amid lacklustre steel demand.

The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) surrendered some earlier losses by closing daytime trading 0.25% lower at 994 yuan ($138.82) per metric ton, following a drop of 1.1% on Monday.

The benchmark February iron ore on the Singapore Exchange similarly narrowed losses in the afternoon session by dipping 0.11% to $137.85 a ton, as of 0710 GMT.

“With the continuous fall in demand for construction steel products, both steel traders and downstream steel consumers showed limited interest in restocking steel products, which has hampered mills’ enthusiasm in replenishing raw materials,” analysts at Huatai Futures said in a note.

Analysts, however, expect persistent support from a possible flurry of purchasing in coming weeks to sustain production over the week-long Lunar New Year holiday break, coupled with a relatively wide price difference in spot and futures markets.

“Market sentiment is obviously weaker at the moment, but prices are likely to consolidate at a relatively high level given that the tight supply and demand fundamentals will continue,” analysts at Galaxy Futures wrote in a note.

De-stocking of iron ore at major ports will be seen in the first half of the year when supply will typically be constrained by seasonal factors, they said, adding that it’s hard to see a big jump in supply globally in the period.

Other steelmaking ingredients on the DCE also fell amid diminishing demand and eased supply concerns, with coking coal and coke down 1.68% and 0.91%, respectively. Steel benchmarks on the Shanghai Futures Exchange were mixed.

Rebar shed 0.63% and hot-rolled coil edged down 0.32%, while wire rod climbed 1.31% and stainless steel was flat. A basket of key data, including imports and exports, is due to release this Friday.