China’s iron ore futures fell more than 5 percent on Wednesday, the steepest single-day drop in more than two weeks, on supply concerns as stocks of the steelmaking raw material at the country’s ports have risen to the highest in at least 13 years.
The decline also tracked losses in Chinese steel prices after they climbed to nine-week highs on Monday.
Iron ore “supply is bearish” with the expected pickup in imports, said Hui Heng Tan, analyst at Marex Spectron.
“The continued destocking of imported ore by mills is expected to provide headwinds for prices,” Tan said in a note.
The most-traded iron ore contract for September delivery on the Dalian Commodity Exchange was down 5.1 percent at 464.50 yuan ($67) a tonne by 0220 GMT. It was the biggest decline since the contract slumped 6.3 percent on May 5.
Imported iron ore inventories at China’s ports rose to 136 million tonnes last week, the most since 2004, according to SteelHome consultancy.
The decline in Chinese iron ore futures should drag down spot prices further.
Iron ore for delivery to China’s Qingdao port fell 1.9 percent to $62 a tonne on Tuesday, according to Metal Bulletin.
The slide in Chinese steel futures for a second straight day on Wednesday also pressured iron ore prices.
The most-active rebar on the Shanghai Futures Exchange was last down 2.1 percent at 3,251 yuan a tonne.
But Morgan Stanley said the sustained fall in Chinese steel stockpiles pointed to strong downstream demand.
Steel product inventories held by Chinese traders in the week to May 19 dropped 5.6 percent from the previous week, Morgan Stanley said in a May 22 report.
Source: ReutersPrevious Next