SHANGHAI: Iron ore prices eased on Monday as seasonally faltering demand and thinning steel margins in top consumer China countered hopes that Beijing would unveil stimulus later this week to shore up the economy.
The most-traded iron ore contract on China’s Dalian Commodity Exchange (DCE) closed daytime trade down 0.27percent at 741 yuan (USD109.50) a metric ton. The benchmark August iron ore on the Singapore Exchange was 0.56percent lower at USD97.6 a ton, as of 0800 GMT.
Consumption of the key steelmaking ingredient softened as several Chinese steelmakers began equipment maintenance after steel demand seasonally weakened and margins sharply contracted.
Average daily hot metal output, a gauge of iron ore demand, declined for a third straight week, by 0.6percent from the prior week to 2.38 million tons as of July 23, the lowest since April 3, data from consultancy Mysteel showed.
“Persistently shrinking steel margins, coupled with production restrictions at some steelmakers in Tangshan (China’s steelmaking hub), will keep hot metal output suppressed,” analysts at broker Hongyuan Futures said in a note.
The market has been focused on an end-July meeting of the Politburo, a top decision-making body of the Communist Party, during which policymakers will likely strengthen countercyclical policy support and introduce incremental measures to stabilise economic growth, analysts at Everbright Futures said in a note.
Elsewhere, Fortescue founder Andrew Forrest called for China and Australia to “always negotiate fairly” as the world’s fourth-largest iron ore producer negotiates annual supply terms with its biggest customer. Other steelmaking ingredients were mixed, with coking coal down 1.05percent and coke up 0.68percent.
Steel benchmarks on the Shanghai Futures Exchange moved sideways. Rebar added 0.16percent, hot-rolled coil advanced 0.34percent while wire rod edged down 0.09percent and stainless steel lost 0.34percent.
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