Chinese iron ore futures drifted down for a third day in a row on Friday amid concerns that consumption of the steelmaking commodity in the world’s top user would be reduced as steel producers slash production over winter.
The mills across northern China, along with other industrial plants, had been ordered to curb output for four months from mid-November to limit smog during the cold season.
“With the cuts to steel output and other industrial activity to last until mid-March, there is a good likelihood that iron ore prices could drift even lower in coming months,” Commonwealth Bank of Australia analyst Vivek Dhar said in a note.
The most-actively traded iron ore for January delivery on the Dalian Commodity Exchange closed down 1.4 percent at 462.50 yuan ($70) a tonne.
Spot iron ore prices have fallen more than 10 percent from near $70 a tonne in late September.
Iron ore for delivery to China’s Qingdao port stood at $62.32 a tonne on Wednesday, little changed from the previous day, according to Metal Bulletin.
Dhar said an increase in global iron ore supply may push prices below $60 a tonne by mid-2018.
BMI Research, a unit of Fitch Group, sees iron ore averaging at $50 in 2018 and slipping to $48 in 2019, saying slower economic growth in China could weaken steel demand.
“The strong iron ore import demand seen in 2017 will cool in 2018 as steel production growth will taper due to lower prices from oversupply,” BMI analysts wrote in a report this week.
“This will be driven by (the) reining in of China’s fiscal spending from 2018 onwards.”
The price of construction steel product rebar on the Shanghai Futures Exchange ended 0.3 percent higher at 3,796 yuan a tonne.
Coke , another steelmaking ingredient, slid 3.4 percent to 1,826.50 yuan per tonne, after touching a three-week high on Thursday.
Source: ReutersPrevious Next