BEIJING: Prices of iron ore futures struggled for direction on Wednesday, as support from improved economic data in top consumer China partially offset lingering pressure from tepid near-term demand, high portside stockpiles and a stronger US dollar.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) was down 0.79% at 811.5 yuan ($111.88) a metric ton, as of 0252 GMT. The contract dropped more than 4% in the previous session.
The benchmark July iron ore on the Singapore Exchange traded 0.34% higher at $104.55 a ton. China’s consumer inflation held steady in May, while the decline in producer prices eased, according to official data on Wednesday.
Producer prices, which were stuck in deflation since September 2022, fell at a slower 1.4% pace in May after contracting 2.5% in April, and compared with a forecast 1.5% decline.
Analysts at Soochow Futures forecast prices to continue the downtrend this week, citing subdued demand, relatively steady shipments and a further pick-up in portside inventory.
“The market has reached certain consensus that hot metal output has peaked as the weakening steel demand curbed mills’ interest in ramping up production,” analysts at Shengda Futures said in a note, forecasting shipments in June to reach the highest level this year amid miners’ push to achieve quarterly targets.
It’s mainly the sagging domestic demand and a firmer dollar that recently weighed on prices of bulk commodities, analysts at Galaxy Futures said in a note.
Other steelmaking ingredients on the DCE gained, with coking coal and coke up 0.96% and 0.63%, respectively. Most steel benchmarks on the Shanghai Futures Exchange extended falls, albeit at a slower pace.
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