Iron ore futures log weekly losses on supply outlook, demand concerns
China’s iron ore futures extended losses on Friday and posted their first weekly decline in three, pressured by rising portside stockpiles in the world’s top steel producer and dimming global demand recovery prospects for steel products.
The most-traded January 2021 contract for the steelmaking ingredient on China’s Dalian Commodity Exchange closed 0.6% lower at 785.50 yuan ($117.05) a tonne, extending losses into a fourth straight session and falling 4.6% from last week.
Iron ore’s front-month November contract on the Singapore Exchange rose 0.6% to $114.80 a tonne by 0734 GMT, after a four-day slump, but was also heading for a weekly loss.
Rio Tinto Ltd warned that a resurgence in coronavirus cases was putting global economic growth at risk, and that steel production outside China has sharply dropped, even as stimulus measures prop up demand in the top consumer.
“New lockdown measures to stem the spread of the virus in Europe are threatening to plunge the region back into recession after a brief respite over the summer, while disputes among policymakers risk delaying much-needed stimulus,” analysts at ING said in a note.
Rio Tinto, the world’s largest iron ore miner, however maintained its full-year shipment forecast of between 324 million tonnes and 334 million tonnes.
The coronavirus-related decline in global steel demand this year though will be less than expected at 2.4% after a buoyant recovery in China, according to the World Steel Association.
China’s iron ore port inventory is piling up due to a sluggish global steel demand, hitting a seven-month high of 123.6 million tonnes last week, SteelHome consultancy data showed. SH-TOT-IRONINV
Construction steel rebar on the Shanghai Futures Exchange rose 0.8%, while hot-rolled coil climbed 0.4% and stainless steel gained 0.3%.
Dalian coking coal slipped 0.4%, but coke advanced 0.9%.