BEIJING: Iron ore futures slid on Friday, weighed down by dwindling demand and rising inventories in top consumer China, but hopes of a trade deal between the world’s two-largest economies kept prices on track for weekly and monthly gains.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) fell 0.93 percent to 797 yuan (USD111.89) a metric ton as of 0148 GMT, rising 3.3 percent so far this week.
The benchmark December iron ore on the Singapore Exchange fell 0.61 percent to USD105.8 a ton as of 0138 GMT, gaining 2 percent so far this week. Both benchmarks posted a monthly gain of around 2 percent on optimism of a trade deal during a meeting between US President Donald Trump and his Chinese counterpart, Xi Jinping, on Thursday. The macro-led driving forces receded after the Trump-Xi meeting, analysts at broker First Futures said.
But as the macro boost had been fully priced in, investors shifted focus back to weakening fundamentals of the key steelmaking ingredient. Average daily hot metal output, a gauge of iron ore demand, fell 1.5 percent week-on-week to 2.36 million tons as of October 30, while portside inventories rose 0.8 percent in the same period, data from consultancy Mysteel showed.
Further pressuring prices was downbeat data, with China’s factory activity shrinking for a seventh month in October, an official survey showed on Friday. Coking coal and coke, other steelmaking ingredients, rose 1.04 percent and 0.58 percent, respectively.
Most steel benchmarks on the Shanghai Futures Ex-change lost ground. Rebar shed 0.19 percent, hot-rolled coil dipped 0.21percent, stainless steel slipped 0.43percent, while wire rod added 0.12percent.