BEIJING: Iron ore futures prices slid on Wednesday on risk-off sentiment spurred by the escalation of trade tensions between United States and China, although lingering expectations of fresh Chinese economic stimulus capped losses.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) ended morning trade 0.19% lower at 807 yuan ($110.84) a metric ton.
The benchmark January iron ore on the Singapore Exchange was 0.67% lower at $104.4 a ton, as of 0405 GMT.
China on Tuesday banned exports of critical minerals gallium, germanium and antimony that have widespread military applications to the United States, a day after Washington’s latest crackdown on China’s chip sector, escalating trade tensions.
That has broadly weighed on investors and traders’ appetite, sending downward pressure to prices of the key steelmaking ingredient, said analysts.
However, hopes of more fiscal stimulus from China’s upcoming Central Economic Work Conference limited losses, as the country is the world’s biggest consumer of metals.
“The market is holding high expectations for incremental stimulus … domestic ore demand remains resilient,” analysts at Sinosteel Futures said in a note.
That said, prospects of growing overseas supply also limited the upside potential for prices, according to analysts.
Vale, one of the world’s largest iron ore suppliers, on Tuesday estimated that it would produce between 325 million and 335 million tons of iron ore in 2025, compared with about 328 million tons this year.
Other steelmaking ingredients on the DCE tumbled, with coking coal and coke down 3.33% and 3.35%, respectively.
“Abundant supply and a lack of market confidence weighed on prices of coking coal and coke,” analysts at Galaxy Futures said in a note. Most steel benchmarks on the Shanghai Futures Exchange lost ground on lower raw materials prices.
Rebar fell 0.96%, hot-rolled coil slipped 0.79%, wire rod shed 0.98% while stainless steel gained 0.31%.
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