SINGAPORE: Iron ore futures slid on Thursday, weighed down by signs of weak demand after China’s new yuan loans unexpectedly contracted for the first time in two decades, while steel prices fell on high supply and seasonally lower consumption.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) fell 1.88% to 783.5 yuan ($109.25) a metric ton by 0259 GMT.
The benchmark September iron ore on the Singapore Exchange was 0.78% lower at $102.7 a ton.
China’s new yuan loans contracted in July for the first time in two decades, indicating weak private sector demand amid trade deal negotiations with Washington.
Despite the first contraction in new yuan loans since July 2005 and the largest monthly decline since December 1999, improvements in broader credit growth suggest the central bank is in no rush to ease policy.
China’s demand for construction steel is expected to remain stable in August, supported by the launch of new projects, though recent adverse weather has disrupted outdoor construction, Chinese consultancy Mysteel said in a note.
Despite speculative demand for finished steel products, high crude steel supply and seasonally lower demand are pressuring prices, said broker Galaxy Futures.
Still, reports of production restrictions on steel mills later this month, a 90-day extension to a tariff truce between the United States and China, and the “anti-involution” campaign targeted at curbing price wars in China provided some support to prices, Galaxy said.
Other steelmaking ingredients on the DCE slumped, with coking coal and coke down 5.17% and 3.59%, respectively.
China’s coking coal market softened following a buying spree, with end-users stepping up material cost controls, Mysteel said in a separate note.
Steel benchmarks on the Shanghai Futures Exchange fell. Rebar lost 1.29%, hot-rolled coil dipped 1.04%, wire rod slid 1.1% and stainless steel decreased 0.76%.
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