SINGAPORE: Iron ore futures prices fell on Tuesday, pressured by weak China manufacturing data, but were on track for solid quarterly gains as robust export-driven rallies in July and August outweigh recent declines.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) was down 0.45 percent at 782 yuan (USD109.73) a metric ton, as of 0238 GMT. The contract has declined 0.51percent so far this month, but has risen 9.82 percent in the quarter.
The benchmark September iron ore on the Singapore Exchange was 0.05percent lower at USD105.25 a ton. The contract has risen 12.27percent so far in the quarter.
China’s manufacturing sector contracted for the sixth consecutive month in September, according to an official survey, suggesting that producers are waiting for further stimulus to boost domestic demand. New export orders rose for the first time since March, alleviating some concerns over the recent weakness in exports.
Citi analysts had noted earlier this month that the better-than-expected export performance may not be sustainable as steel margins come under pressure.
A private-sector survey by RatingDog showed that China’s factory activity in September expanded at the quickest pace since March, with rising new orders driving faster production growth.
“The notable improvement of profitability in raw material sectors such as steel hints at the government’s anti-involution policies at work,” said analysts from Goldman Sachs.
Other steelmaking ingredients on the DCE lost ground, with coking coal and coke down 1.45 percent and 0.78 percent, respectively. Steel benchmarks on the Shanghai Futures Exchange declined. Rebar fell 0.58 percent, hot-rolled coil eased 1.12 percent, wire rod slumped 3.99 percent and stainless steel edged down 0.04 percent.
Billet production in Chinese steelmaking hub Tangshan rose during September 22-28, even though profits that steelmakers could earn from billet sales contracted, according to consultancy Mysteel.
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