BEIJING: Prices of iron ore futures dropped on Thursday as traders weighed fears of weakening demand from top consumer China and the potential impact of upcoming Sino-US talks on trade tariffs.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) ended morning trade 2.17% lower at 697.5 yuan ($96.43) a metric ton. The benchmark June iron ore on the Singapore Exchange lost 1.19% to $97.15 a ton, as of 0318 GMT.
“It’s mainly resumed expectations of steel output cuts that are driving the market movement with price fall of steelmaking ingredients more dramatic than that of steel,” said Zhuo Guiqiu, an analyst at broker Jinrui Futures.
Relevant authorities are actively advancing the national crude steel output control, state-backed China Metallurgical News said, citing officials from the steel association. In March, China unveiled its plan to restructure its giant steel industry through production cuts, without elaborating the timing and scale.
“This saying from the steel association has reinforced such expectations (of steel output cut). Moreover, hot metal output is set to brace a peak soon.”
Hot metal output, a blast furnace product, is typically used to gauge iron ore demand. Other steelmaking ingredients on the DCE slumped, with coking coal and coke down 2.35% and 2.58%, respectively.
Most steel benchmarks on the Shanghai Futures Exchange retreated. Rebar lost 1%, hot-rolled coil shed 0.87%, wire rod dipped 0.72% and stainless steel added 0.12%.
Iron ore up on China stimulus, Sino-US trade talks
The broad weakness in the ferrous market came despite Beijing injecting a raft of monetary stimulus on Wednesday as part of efforts to soften the economic damage caused by the trade war with the United States.
“It’s not a very good signal for the Sino-US trade talks if looking at the stimulus package, which hints a preparation for the best-case scenario,” said an analyst on condition of anonymity because of the sensitiveness of the matter.
Comments
Comments are closed for this article.