Iron ore steady after four-day decline amid oversupply concerns
- The benchmark December iron ore on the Singapore Exchange was 0.16% lower at $103.35 a ton
SINGAPORE: Dalian iron ore futures prices held steady on Thursday following a four-day slump, though lingering concerns about oversupply continued to weigh on market sentiment.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) traded 0.39% higher at 775.5 yuan ($108.87) a metric ton as of 0318 GMT.
The benchmark December iron ore on the Singapore Exchange was 0.16% lower at $103.35 a ton.
With the optimism and rally following the Fourth Plenum now fading, markets are left with few new concrete details on “anti-involution” measures or long-term steel capacity reforms, said Atilla Widnell, managing director at Navigate Commodities in Singapore.
Anti-involution refers to China’s campaign aimed at curbing overcapacity and unsustainably low prices across many industries.
So far, there has been little incentive for mills to permanently decommission plants, raising concerns that oversupply will continue for the time being.
As a result, relatively high steel output during a season of weak demand is weighing on steel prices, profit margins, and input costs such as iron ore, Atilla added.
Additionally, iron ore prices have come under pressure due to concerns over weaker demand, as an environmental production-cut warning for steel mills in Hebei province is expected to affect blast furnace operations, according to analysts at ANZ.
Meanwhile, global iron ore supply remained elevated in the third quarter, and similarly high levels are anticipated for the fourth quarter, said Chinese broker Galaxy Futures.
Total iron ore stockpiles across ports in China climbed 1.53% week-on-week to about 135.6 million tons, as of October 31, according to SteelHome data.
Other steelmaking ingredients on the DCE gained ground, with coking coal and coke up 2.1% and 1.78%, respectively.
Steel benchmarks on the Shanghai Futures Exchange were mixed. Rebar rose 0.3%, and hot-rolled coil climbed 0.58%, while wire rod edged down 0.06% and stainless steel eased 0.16%.