Iron ore dips as market awaits clarity on Sino-US trade talk progress

BEIJING: Iron ore futures prices slid on Thursday as investors awaited more details on the trade talks between the US and China even as US President Donald Trump struck a positive note.

The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) closed the daytime trade 0.21% lower at 704 yuan ($98.05) a metric ton. The benchmark July iron ore on the Singapore Exchange dipped 0.53% to $94.6 a ton as of 0710 GMT.

Trump on Wednesday said he was very happy with a trade deal that restored a fragile truce in the US-China trade war. The Chinese foreign ministry said on Thursday that China will always honour its commitments, without elaborating.

“If both countries could finalise a deal, it’s definitely good news as it will remove some uncertainty for the export business; but at the same time, it may reduce the possibility of more stimulus (by Beijing),” said a steel mill manager on condition of anonymity. Focus has temporarily shifted to the weakening fundamentals before there is more clarity on Sino-US trade talks, said Ge Xin, deputy director at consultancy Lange Steel.

“Steel output has been declining for two weeks, indicating lower consumption of raw materials, including iron ore,” Ge said. Other steelmaking ingredients on the DCE lost ground, with coking coal and coke down 2.79% and 1.77%, respectively. Most steel benchmarks on the Shanghai Futures Exchange declined amid falling demand. Rebar lost 0.7%, hot-rolled coil fell 0.87%, wire rod dropped 0.75% while stainless steel added 0.48%.

Apparent consumption of five mainstream steel products composing rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plate slid by 1.6% in the week as of June 12, following a weekly drop of 3.5%, data from consultancy Mysteel showed.