BEIJING: Iron ore futures prices fell on Tuesday, amid mounting risk-off sentiment as fundamentals of the key steelmaking ingredient remained unfavourable and as downstream steel consumption in top consumer China disappointed the market.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trade 3.72% lower at 814.5 yuan ($112.85) a metric ton, the lowest since Mar. 21. It posted a week-on-week rise of 6.1% on Mar. 22.
The benchmark April iron ore on the Singapore Exchange slid by 4.34% to $103.85 a ton, as of 0702 GMT, the lowest since Mar. 19.
“We think this is a normal downward correction following a rapid price rise in the past week especially when there is no material improvement in fundamentals,” Chu Xinli, a Shanghai-based analyst at China Futures said.
“Based on the latest data, the overall ore shipments stayed at a relatively high level while the hot metal output increased at a slower-than-expected pace.”
Daily pig iron - the solid form of hot metal - output among member steelmakers surveyed stood at around 1.84 million tons over March 11-20, down 0.41% from the previous ten-day period and down 6.56% year-on-year, data from the state-backed China Iron and Steel Association showed.
Weighing down sentiment is also diminishing buying appetite in the seaborne market following the latest wave of restocking from steelmakers, analysts said.
Transition volumes of seaborne iron ore tumbled by 73.4% from last Friday to 380,000 tons on Monday, data from consultancy Mysteel showed.
Other steelmaking ingredients on the DCE also weakened, with coking coal and coke down 3.24% and 3.97%, respectively.
Steel benchmarks on the Shanghai Futures Exchange were broadly lower. Rebar lost 2.75%, hot-rolled coil shed 2.17%, wire rod declined 1.47% and stainless steel dropped 1.41%.
A lack of sufficient capital has slowed down the construction of infrastructure and property projects in the first quarter of 2024, analysts at Galaxy Futures said in a note.
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