SINGAPORE: Iron ore futures fell for a third session on Tuesday, weighed by climbing stockpiles of the steelmaking ingredient and disappointment with the lack of further monetary stimulus from top consumer China.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) traded 1.84% lower at 746.5 yuan ($101.85) a metric ton as of 0310 GMT.
The benchmark February iron ore on the Singapore Exchange was 0.61% lower at $96 a ton.
“Iron ore markets have been floored by…a week-on-week increase in arrivals of cargoes in Chinese waters, likely to amplify already burgeoning portside inventories,” said Atilla Widnell, managing director at Navigate Commodities.
A protracted supply surplus in the country’s iron ore market will keep China’s prices for imported iron ore under downward pressure this year, Chinese consultancy Mysteel said in a note.
Global ore miners will continue to ramp up production while demand for the raw material among Chinese mills is likely to shrink further, Mysteel added.
Meanwhile, bullish traders who had been pricing in a year-end Chinese rate cut have now realised that China’s central bank may not act on rates till March, Widnell added.
Iron ore drops to over one-month low
The People’s Bank of China (PBOC) said it would strengthen monetary policy adjustments and cut banks’ reserve requirement ratios and interest rates at “an appropriate time,” according to a statement released on Friday.
On Monday, concerns that US President-elect Donald Trump may impose higher tariffs on Chinese imports as Beijing attempts to revive the economy sent the yuan sliding and rattled Chinese stock markets.
Chinese authorities have introduced various support measures since September to shore up investor confidence.
Other steelmaking ingredients on the DCE posted losses, with coking coal and coke down 1.69% and 1.91%, respectively.
Most steel benchmarks on the Shanghai Futures Exchange weakened. Rebar and hot-rolled coil dipped nearly 0.9%, wire rod edged down 0.14%, while stainless steel added 0.3%.
Source: Brecorder
