BEIJING: Iron ore futures fell for a fifth straight session on Friday, heading for a second weekly loss, with bearish sentiment prevailing after weaker-than-expected steel prices in top consumer China hurt the demand outlook.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trade 0.99% lower at 697 yuan ($97.16) a metric ton. It posted a fall of 6.1% from last Friday’s close and a decline of 26% so far this year.
The benchmark September iron ore on the Singapore Exchange slid 1.39% to $92.25 a ton, as of 0715 GMT, recording a loss of 8.7% so far this week.
A steeper-than-expected fall in steel prices in China has undermined sentiment, pressuring demand and prices for steelmaking ingredients including iron ore, said analysts. Rebar, mainly used in the construction sector, slumped to the lowest since June 2017 during this week while hot-rolled coil, typically used in the manufacturing area, tumbled to the lowest since April 2020.
They closed daytime trade 0.71% and 1.8% lower, respectively. Analysts at Macquarie said in a note that “55% of steel mills experienced decreased domestic orders into August compared to prior 30% ... property remains the main drag among end-user sectors”. “Steel mills showed less interest in restocking raw materials.” Average daily hot metal output among steelmakers surveyed extended falls into a third straight session, down 1.3% from the previous week to around 2.29 million tons as of Aug. 16, according to data from consultancy Mysteel.
Profitability among mills shrank to 4.76% from 5.19% previously, the data showed. The conflict of a mismatch between supply and demand eased to some extent after ore prices touched the key production cost threshold of $90 a ton for some overseas miners, analysts at Huatai Futures said in a note.
Other steelmaking ingredients on the DCE were mixed, with coking coal rising 0.15% while coke shed 2.3%. The other two steel benchmarks on the Shanghai Futures Exchange, wire rod dipped 0.13% while stainless steel added 0.52%.
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