Iron ore drops further as strong supply, China steel sell-off weigh
Business
Steel benchmarks on the Shanghai Futures Exchange were weaker.
SINGAPORE (Reuters) - Iron ore futures prices lost further ground on Thursday, weighed by strong global supply and the persistently weak steel market in top consumer China, although hints of heavier monetary stimulus helped limit losses.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) fell for a fifth straight session to close morning trade with a loss of nearly 1% to 769 yuan ($105.93) a metric ton.
The benchmark August iron ore on the Singapore Exchange fell below the key psychological level of $100 a ton to hit an intraday low of $99.2 a ton. It lost 0.79% at $100.1 a ton, as of 0351 GMT.
Regional steel trading associations in China are seeking new quality standards for steel rebar, used in construction, to be delayed after a wave of panic inventory sell-downs pressured the ferrous market.
Steel benchmarks on the Shanghai Futures Exchange were weaker. Rebar, hot-rolled coil and stainless steel fell more than 1%, while wire rod tumbled over 4%.
Hopes of optimistic financial markets trading China’s industrial metals complex have been met with “crushing disappointment” after China’s third plenum failed to deliver on expectations of broad-stroke stimulus measures, said Atilla Widnell, managing director at Navigate Commodities.
More worryingly, a slew of dismal Chinese data last week shows an accelerating pace of contraction in floor space under construction, completions and property prices, meaning hyped-up government policies to mop up excess housing inventories are having a muted impact, Widnell added.
Australia’s Fortescue forecast higher iron ore shipments for fiscal 2025 and posted a 24% sequential rise to record shipments in the fourth quarter.
However, iron ore prices clawed back some losses after China’s central bank surprised markets by conducting an unscheduled lending operation at steeply lower rates, suggesting authorities are trying to provide heavier monetary stimulus.
Other steelmaking ingredients on the DCE- coking coal and coke lost 0.17% and 0.64%, respectively.
