SINGAPORE: Iron ore futures hit seven-week lows on Tuesday, weighed down by rising stocks of the steelmaking ingredient and disappointment over a lack of further monetary stimulus in top consumer China.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trade 1.38% lower at 750 yuan ($102.38) a metric ton. Earlier in the session, the contract fell to its weakest level since Nov. 19 at 745.5 yuan.
The benchmark February iron ore on the Singapore Exchange was 0.06% higher at $96.65 a ton, as of 0704 GMT. It hit its lowest level since Nov. 18 earlier in the day.
“Iron ore markets have been floored by... a week-on-week increase in arrivals of cargoes in Chinese waters, likely to amplify already burgeoning portside inventories,” said Atilla Widnell, managing director at Navigate Commodities.
A protracted supply surplus in the domestic iron ore market will keep China’s prices for imported iron ore under pressure this year, Chinese consultancy Mysteel said in a note.
Global ore miners will continue to ramp up production while demand for the raw material among Chinese mills is likely to shrink further, Mysteel said.
Meanwhile, bullish traders who had been pricing in a year-end rate cut in China have now realised that the central bank may not act on rates till March, Widnell said.
The People’s Bank of China said on Friday it would strengthen monetary policy adjustments and cut banks’ reserve requirement ratios and interest rates at “an appropriate time”.
On Monday, concerns that US President-elect Donald Trump may impose higher tariffs on Chinese imports as Beijing attempts to revive the economy sent the yuan sliding and rattled Chinese stock markets.
Other steelmaking ingredients on the DCE weakened, with coking coal and coke down 2.21% and 2.02%, respectively.
Steel benchmarks on the Shanghai Futures Exchange traded sideways. Rebar and hot-rolled coil dipped 0.83%, stainless steel edged up 0.47% and wire rod added 0.25%.
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