Dalian iron ore fell for a third straight session on Friday, putting it on track for its first weekly decline in a month, as a gloomy outlook for Chinese demand outweighed Rio Tinto’s shipment forecast cut for this year.
The steelmaking ingredient’s most-active January contract on China’s Dalian Commodity Exchange slipped 0.5% to 727 yuan ($112.95) a tonne by 0330 GMT, and has fallen nearly 3% from last week.
But the most-traded November contract on the Singapore Exchange rose 0.5% to $124.20 a tonne, after Rio Tinto Group lowered its 2021 shipment forecast.
Still, the bearish outlook for steel demand in China and an intensified decarbonisation efforts in the world’s top steel producer through output restrictions weighed heavily on sentiment.
Spot iron ore in China traded at $121 a tonne on Thursday, down 5% from last week, and off nearly 50% from a record peak in mid-May, SteelHome consultancy data > showed.
“We expect ore prices to continue to drift lower for the next two years,” said Justin Smirk, senior economist at Westpac, as he predicted that China’s steel output will stabilise rather than surge to levels seen in recent years.
China’s crude steel production shrank in July and August amid output curbs, while its steel demand is now forecast to shrink 1% this year instead of grow by 3%, according to the World Steel Association.
The collapse in iron ore prices is in stark contrast to the record-setting advance of two other steelmaking inputs driven by supply worries.
Dalian coking coal rose as much as 4.9% and headed for its fourth straight weekly advance. Coke climbed 5.3%, and are on track for its biggest weekly gain since December 2018.
Depressed iron ore prices and still-high steel prices, however, are supporting mills’ margins.
Construction steel rebar on the Shanghai Futures Exchange rose 1%, and hot-rolled coil climbed 1.6%. Stainless steel jumped 1.8%.
Source: Brecorder