BEIJING: Iron ore prices dropped on Wednesday for a second consecutive session, as rising supply outweighed strong short-term demand for the steelmaking ingredient.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) closed daytime trade 0.64 percent lower at 777.5 yuan (USD108.70) a metric ton.
The benchmark September iron ore on the Singapore Exchange was flat at USD102.35 a ton, as of 0714 GMT. Healthy steel margins drove daily hot metal output to hover around 2.4 million tons, generating firm demand for raw materials, including iron ore, and arresting a price slump.
Profit among Chinese steelmakers spiked by 5175 percent to 64.4 billion yuan in the first seven months, according to data from the National Bureau of Statistics, while China’s industrial profits fell for a third consecutive month in July.
Meanwhile, analysts said iron ore supply is expected to rise in the remainder of the year, putting further pressure on prices. Shipments from key supplier Australia missed expectations in the first half of the year following cyclones-led disruptions earlier in the year. Moreover, downstream steel consumption showed signs of softening as demand from manufacturing fell, broker Galaxy Futures said.
Steel inventories rose to 15.67 million tons during August 11-20, up 4 percent from the prior 10-day period, data from the state-backed China Iron and Steel Association showed.
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