MANILA: Dalian iron ore fell for a fifth straight session on Thursday and hit its lowest in more than two weeks, dragged down by a pessimistic outlook for demand from top steel producer China.
The most-traded iron ore for September delivery on China’s Dalian Commodity Exchange ended morning trade 1.9% lower at 873 yuan a tonne, after earlier falling to 864 yuan, its weakest since May 30. On the Singapore Exchange, the front-month July contract rose as much as 3.5% to $134 a tonne, before giving up most of the gains to trade 0.3% higher at $129.85 a tonne by 0518 GMT.
Other steel inputs fell more sharply, with Dalian coking coal tumbling 4.8% and coke slumping 5%. Several factors have clouded steel demand prospects in China, such as the rainy season that usually disrupts construction activity, restrictions put in place to contain COVID-19 outbreaks, and weak profits at steel mills. “Steel inventory is rising, and prices are falling.
The spot price of rebar fell to the lowest level in 15 months,” analysts at Westpac said in a note. Wednesday’s data showing signs of an economic recovery in China last month failed to ease concerns about demand, with the pessimism gripping the futures markets also weighing on spot prices of iron ore.
Benchmark 62%-iron ore’s spot price in China was assessed at a three-week low of $133 a tonne on Wednesday by SteelHome consultancy.
After ramping up crude steel production in May, Chinese mills’ average daily output over June 1-10 fell 1.3% from the same period in May, Mysteel consultancy said, citing data from the China Iron & Steel Association. Construction steel rebar on the Shanghai Futures Exchange dropped 1.3%, while hot-rolled coil dipped 0.9%. Stainless steel rose 0.3%.