Iron ore dips on the back of cooling demand and stockpiling
- The most-traded May iron ore contract on China's Dalian Commodity Exchange (DCE) traded 0.51% lower at 773.5 yuan
SINGAPORE: Iron ore futures fell on Friday, weighed down by steelmaking ingredients coking coal and coke, as inventories stockpile and demand cools.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) traded 0.51% lower at 773.5 yuan ($110.40) a metric ton, as of 0224 GMT.
The benchmark January iron ore on the Singapore Exchange was 0.1% lower at $103.95 a ton, as of 0224 GMT.
Total iron ore stockpiles across Chinese ports climbed 2.26% week-on-week to about 148.8 million tons, as of December 26, according to SteelHome data.
Inventories of the five major carbon steel products held by the Chinese steel mills declined to 14.5 million tonnes by December 25, logging the lowest since late January, said consultancy Mysteel.
Australian and Brazilian mines have contributed to an increase in iron ore production output, but China’s demand for steel has declined amid its protracted property market.
China’s property market, which used to be the largest steel consumer, has been struggling with a persistent decline since mid-2021, with home prices falling and sales shrinking.
The country announced a licensing system on December 12 aiming to regulate exports of steel in an effort to stabilise prices.
However, Japan Iron and Steel Federation Chairman Tadashi Imai said on Thursday that the licensing system would not be a very effective countermeasure in addressing these issues.
Japan, the second largest exporter of steel globally, has criticised Chinese firms for receiving government subsidies that encourage overproduction and low-priced exports, worsening global market conditions.
Other steelmaking ingredients on the DCE fell sharply, with coking coal and coke down 4.04% and 3.39%, respectively.
The decline in coking coal prices were a reflection of cooling demand. Around 47.7% of total coking coal cargoes offered in auctions on December 25 failed to find buyers, according to Mysteel.
Most steel benchmarks on the Shanghai Futures Exchange fell.
Rebar lost 1.02%, hot-rolled coil fell 0.76%, and stainless steel pulled back by 0.12%. However, wire rod rose by 2.57%.
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