Iron ore futures in China slipped on Monday, extending last week’s losses as supply at the country’s ports rose to nearly match a 13-year high, underlining slow demand for the steelmaking raw material.
But a rebound in Chinese steel prices capped losses in iron ore, with other raw material coking coal advancing.
The most-traded iron ore on the Dalian Commodity Exchange closed 0.2 percent lower at 466.50 yuan ($68) a tonne, after falling as far as 457.50 yuan. It declined 8.2 percent last week, its biggest such decline since late December.
The inventory of imported iron ore at 46 Chinese ports rose to 131.95 million tons on Friday, up 1.4 million tonnes from a week ago, according to SteelHome. The stockpiles hit 132.45 million tonnes in March, the most since SteelHome began tracking it in 2004.
Rising supply and the recent weakness in steel prices, spurred by worries over softer consumption, have dragged down iron ore, said Commonwealth Bank of Australia analyst Vivek Dhar.
“Chinese steel mills also refrained from buying iron ore on speculation that production cuts will be introduced later this week ahead of the One Belt One Road conference,” said Dhar.
Leaders from 28 countries will gather in Beijing on May 14 to 15 for talks on what China formally calls the “One Road, One Belt” plan that envisions expanding trade and energy links between Asia, Africa and Europe underpinned by billions of dollars in infrastructure investment.
China typically orders industrial plants to cut or limit production to help clear the skies ahead of a major event such as when it hosted the G20 Summit in Hangzhou last year.
China’s iron ore imports reached 82.23 million tonnes in April, the lowest since October.
Iron ore prices may find support from a pickup in steel demand in China later in the year, said Dhar.
“Chinese steel demand is likely to remain supported as policy makers look to ensure stable economic growth ahead of elections later in the year. In particular, policy makers have targeted infrastructure investment,” he said.
The most-active rebar on the Shanghai Futures Exchange closed up 2.5 percent at 3,004 yuan per tonne, after dropping 4.4 percent last week. Coking coal on Dalian exchange rose 0.6 percent to 1,039 yuan a tonne.
Iron ore for delivery to China’s Qingdao port fell 5.3 percent to $61.73 a tonne on Friday, the lowest since October 2016, according to Metal Bulletin.
The spot benchmark lost 10.3 percent last week, the most since May last year.
Source: ReutersPrevious Next