SINGAPORE: Iron ore futures drifted lower on Friday as traders closed their positions ahead of a week-long Lunar New Year holiday in China, during which demand is expected to drop significantly.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) was down 1.51percent at 752.5 yuan (USD108.97) a metric ton, as of 0322 GMT.
The contract has lost 1.63percent so far this week. The benchmark March iron ore on the Singapore Exchange was trading 1.24percent lower at USD98.35 a ton. The contract has lost 0.7percent so far this week. It is on track for a fifth consecutive weekly decline, if the current momentum holds. Trading volumes for Dalian iron ore, which had fallen for six consecutive sessions, picked up, according to data compiled by LSEG, likely as traders closed out positions ahead of the week-long Chinese New Year holiday from February 16 to 23.
Meanwhile, shipments from Australia declined after tropical cyclone Mitchell formed off the coast of the resource-rich Pilbara region last week.
Hot metal production at 229 thermal-monitored furnaces has continued to pull back, as operators hot bank or idle their furnaces ahead of the holiday, said Atilla Widnell, managing director at Navigate Commodities.
Demand for feedstock is expected to decrease significantly during the holiday, during which most steel mills will shut down for a break or undergo planned maintenance.
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