SINGAPORE: Iron ore prices extended declines on Friday and were set for a fourth weekly loss, as falling margins for steelmakers in top consumer China curbed buying appetite for the key steelmaking ingredient.
By 0245 GMT, the most-traded iron ore contract on China’s Dalian Commodity Exchange (DCE) slid 0.95percent to 766 yuan (USD113.05) a metric ton, shedding 2.1percent so far in the week.
The contract hit its lowest level since April 15 at 760.5 yuan earlier in the session. The benchmark July iron ore on the Singapore Exchange was little changed at USD101.5 a ton, as of 0235 GMT, declining 3.6percent so far this week. It touched its lowest since March 6 at USD100.85 earlier.
Steel margins have been squeezed by rising coal prices and diminishing domestic demand, said analysts. About 59percent of Chinese steelmakers were operating at a profit on June 4, versus a nine-month high of 64percent on May 14, data from consultancy Mysteel showed. The average daily hot metal output, a gauge of iron ore demand, eased 0.1percent from the week before to a three-week low at 2.41 million tons, the data showed.
“Softer-than-expected seasonal steel demand in China, affected by persistent rainfall and unusually high temperatures, has weighed on iron ore consumption at a time when global supply is rising,” analysts at shipping tracker Kpler said in a note. Other steelmaking ingredients were little changed, with coking coal and coke up 0.32percent and 0.17percent, respectively.
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