BEIJING: Iron ore futures prices extended losses for a sixth consecutive session on Thursday, as lacklustre pre-holiday restocking by steelmakers in top consumer China weighed on sentiment.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) was down 1.43% at 962.5 yuan ($134.44) a metric ton, as of 0215 GMT.
The benchmark February iron ore on the Singapore Exchange dipped 0.21% to $132.55 a ton. “Sentiment soured after hot metal output so far in January failed to pick up as expected,” said a China-based trader, requesting anonymity as he was not authorised to speak to media. “Steelmakers typically prefer to take a watchful stance amid a constant drop in prices, exacerbating the situation.”
Hot metal, a blast furnace product, is generally used to gauge demand for raw materials including iron ore. The scheduled output of steel reinforcing bar (rebar) among mills surveyed fell by 6.5% on the month to 9.67 million tons in January with losses among mills ranging from 100 yuan to 200 yuan a ton, data from consultancy Shanghai Metals Market (SMM) showed.
“It’s hard to see an improvement in steel margins any time soon amid weakening steel demand and relatively high raw materials prices,” SMM analysts said in a note.
“Some mills have recently set up plans for temporary reduction in production while a few others postponed the resumption of blast furnaces that had been under maintenance since December to stem loss,” they added.
Other steelmaking ingredients on the DCE, however, edged higher, with coking coal and coke climbing 0.31% and 0.11%, respectively. Steel benchmarks on the Shanghai Futures Exchange extended losses. Rebar shed 0.36%, hot-rolled coil edged down 0.15%, wire rod fell 1.21% while stainless steel gained 2.31%.
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