Posted on 22 Jul 2022
Dalian and Singapore iron ore futures dropped on Thursday, as investors shifted their focus back to gloomy China demand outlook after a short-lived boost from the latest government rhetoric on economic stimulus.
The most-traded iron ore, for September delivery, on China’s Dalian Commodity Exchange ended daytime trade 0.3% down at 657 yuan ($97.15) a tonne, after earlier touching 646.50 yuan.
On the Singapore Exchange, the steelmaking ingredient’s front-month August contract was down 0.6% at $98.85 a tonne, as of 0708 GMT.
Concerns remain over COVID-19 lockdowns in China, the world’s top steel producer, and their impact on demand for steel products and raw materials despite the goverment’s oft-repeated pledge of policy support for the struggling economy.
The southern megacity of Shenzhen vowed to curb a slowly spreading outbreak, as authorities adhere to China’s unique “zero-COVID” policy.
Risks from lockdowns have prompted the Asian Development Bank to lower its economic growth forecast for China this year by 1 percentage point to 4.0%.
Amid sustained weakness in demand, China’s iron ore market will likely be “oversupplied” in the second half of the year, Zhongzhou Futures analysts said in a note.
Portside iron ore inventory in China rose steadily over the last three weeks to hit a seven-week high of 130.6 million tonnes, SteelHome consultancy data showed, and analysts said stocks may pile up further.
Steel mills have reduced output in recent weeks, putting their facilities under maintenance earlier than usual due to depressed margins.
Dalian coking coal DJMcv1 slumped 4.7% and coke fell 2.2%.
Producers of coke, the processed form of coking or metallurgical coal used in iron ore smelting, have also agreed to curb output to avoid bigger losses, Zhongzhou analysts said.
Rebar on the Shanghai Futures Exchange rose 0.7% and hot-rolled coil climbed 0.5%, rebounding modestly from declines early in the session.
Stainless steel dropped 1.1%.
Source:Reuters
