HANOI: Iron ore futures prices in China posted its eighth consecutive decline on Tuesday as China’s decision to skip an expected rate cut unnerved investors.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) closed 0.6% lower at 938.50 yuan ($130.65) a metric ton.
It hit 924.50 earlier in the session, the weakest since Dec. 20. “Iron ore prices were relatively over-inflated to begin with, as many funds bet big on a stimulus-fuelled recovery eventuating sooner rather than later,” said Atilla Widnell, managing director at Navigate Commodities in Singapore. The Dalian iron ore contract hit a record high on Jan. 3 at 1,025.50 yuan.
“Economic data releases have continued to be disappointing, while financial markets are irrationally demanding more stimulus - most recently being disappointed by the PBOC’s decision to leave the 1YR medium-term lending facility rate unchanged,” Widnell said.
China’s central bank left the medium-term policy rate unchanged on Monday, defying market expectations for a cut.
Prices were also pressured by signs of stronger supply. Iron ore arrivals at China’s 47 major ports rose 8.1% week-on-week to 30.91 million tons during Jan. 8 to Jan. 14, 19% higher than the level almost the same period a year before, data from consultancy Mysteel showed on Monday.
The benchmark February iron ore on the Singapore Exchange, however, was 0.3% higher at $127.80 a ton at 0828 GMT. It rebounded from the lowest since Dec. 6 of $125.45 hit earlier in the session.
Other steelmaking ingredients on the DCE rose, with coking coal up 0.2% at 1,798.50 yuan a ton and coke jumping 1.4% to 2,425.50 yuan.
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