Iron ore pulls back amid heightened demand concerns from China

Iron ore futures fell on Thursday as pessimism about steel demand prevailed in China, even as traders monitored a strong cyclone that could disrupt shipments from Australia, a key supplier of the steelmaking ingredient .

Weakening steel prices in China pointed to sluggish demand at a time when construction activity in the largest iron ore consumer is picking up. Rising recession risks have also clouded the outlook for China’s steel exports, analysts said.

China’s yet-to-be-confirmed plan to cap its annual crude steel output in a bid to curb speculation over iron ore prices has also been a drag on the market.

China is set to unveil a plan that limits output by domestic steelmakers to 2022 levels, Bloomberg reported on Thursday.

The top-traded iron ore on China’s Dalian Commodity Exchange in September closed daytime trade down 3.1% at 769 yuan ($111.89) a ton.

On the Singapore Stock Exchange, the benchmark iron ore contract for May fell 2.3% to $115.55 a tonne.

“Iron ore is facing pressure from price controls and political risks continue to mount,” Sinosteel Futures analysts said in a statement.

Meanwhile, Port Hedland in northwest Australia braced on Thursday for Ilsa, the region’s most powerful tropical cyclone in a decade, with the potential to disrupt supplies and prop up iron ore prices.

Port Hedland is the largest iron ore export point in the world.

Source: Terra

Rose

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