MANILA: Benchmark Dalian iron ore tumbled on Wednesday as commodities derivatives markets in China reopened after a four-day break, dragged lower by the prospect of weaker demand for the raw material in the world’s top steel producer.
Rising iron ore supply from Brazil, China’s second-biggest source of the steelmaking ingredient after Australia, also weighed on prices.
Iron ore for January delivery on China’s Dalian Commodity Exchange dropped as much as 6% to 606 yuan ($93.65) a tonne, its lowest since Nov. 26.
Dalian iron ore has dropped about 16% this year and lost as much as 51% since hitting a record peak in mid-May.
Any respite from sell-offs is unlikely to last long as attention turns to stronger Brazilian shipments, dwarfing a fall in Australian cargoes over the previous week, Atilla Widnell, managing director at Navigate Commodities in Singapore said.
On the Singapore Exchange, October iron ore rose 7.2% to $100.40 a tonne, after sinking by 8% on Monday amid concerns over risks faced by China’s property market from the Evergrande Group’s debt crisis.
Spot iron ore in China tumbled to $103 a tonne last week, the lowest in 14 months, based on SteelHome consultancy data.
“There is no relief on production cut pressure, as the government is asking more provinces around Beijing to cut their steel production to improve air quality ahead of the Winter Olympics next year,” ANZ senior commodity strategist Daniel Hynes said.
China’s output curbs aimed at reducing carbon emissions intensified last month, with top producer Hebei and Shandong provinces posting annual declines of more than 20%, according to industry data provider Mysteel.
Construction steel rebar on the Shanghai Futures Exchange was 0.8% higher by 0232 GMT, while hot-rolled coil slipped 0.5%. Stainless steel gained 2.3%. Dalian coking coal advanced 3.6% and coke climbed 4%.