BEIJING: Iron ore futures ticked down on Wednesday, as concerns of demand languishing in coming weeks in top consumer China and some investors liquidating positions to shift their focus to coking coal weighed.
The benchmark September iron ore on the Singapore Exchange slid 0.56% to $101.9 a metric ton, as of 0205 GMT.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) was little changed at 795.5 yuan ($110.65) a ton.
Buying in the spot market is weak as mills are cautious about stockpiling raw materials ahead of the upcoming big event in September, dragging futures prices, said Cao Ying, a Beijing-based analyst at broker SDIC Futures.
The big event refers to a September 3 Beijing ceremony, commemorating the 80th anniversary of the end of World War Two.
Chinese steelmakers, especially those in the northern region, usually constrain production before big events to ensure air quality in Beijing.
“Speculative sentiment is also very poor as a large amount of capital flowed into the more volatile coal market,” SDIC’s Cao added.
Open interest for iron ore in Dalian fell by 4.2% from the day before on Tuesday while that for Dalian coking coal jumped by 13.7%.
Open interest tallies the number of options contracts that have yet to be settled between buyers and sellers, a measure of investors’ participation in a market.
Three analysts and two traders told Reuters that they have shifted their focus to trade coking coal.
Coking coal extended a price rally, up by 6.76%, underpinned by fears of supply contracting amid potentially more stringent safety checks for coal mines and government investigation for checking excess production, said analysts.
“The price fluctuation of coking coal has attracted more investors and capitals, which in turn aggravated the volatility,” said Zhou Tao, analyst at broker Galaxy Futures.
Coke rose 2.42%.
Steel benchmarks on the Shanghai Futures Exchange gained ground. Rebar and wire rod advanced 0.84%, hot-rolled coil added 0.64% and stainless steel nudged up 0.08%.
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