BEIJING: Iron ore futures prices extended their declines for a second straight session on Wednesday, with top consumer China’s persistently weak factory data hitting fragile investor sentiment amid renewed worries over the recovery of the country’s property sector.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) was down 2.32% to 968 yuan ($134.80) a metric ton, as of 0210 GMT. The benchmark March iron ore on the Singapore Exchange was 1.57% lower at $130.75 a ton, as of 0217 GMT.
China’s manufacturing activity in January contracted for the fourth straight month, an official survey showed on Wednesday, suggesting the sector was struggling to regain momentum at the start of 2024.
The downward correction on ore prices came as the flurry of pre-holiday restocking for feedstocks among steel mills ended and both shipments and port inventories picked up, said Chu Xinli, a Shanghai-based analyst at China Futures.
“But a very steep fall might be unlikely due to improved demand amid the continued increase in hot metal output,” Chu added.
A liquidation order on property giant China Evergrande Group from a Hong Kong court on Monday dealt a fresh blow to the country’s fragile property market, pulling down prices of the key steelmaking ingredient and casting a shadow on the demand outlook.
“The process of carving up the world’s most indebted property developer will likely increase uncertainty in China’s real estate sector.
This could delay the recovery the market had been expecting this year,“ analysts at ANZ bank said in a note.
Other steelmaking ingredients on the DCE posted further losses, with coking coal and coke down 3.88% and 2.49%, respectively.
Steel benchmarks on the Shanghai Futures Exchange languished.
Rebar shed 1.3%, hot-rolled coil retreated 1.2%, wire rod dipped 1.02% and stainless steel dropped 1.24%.
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