Iron ore futures on exchanges in Dalian and Singapore hit five-month lows on Thursday after dropping more than 10% last month on weaker-than-expected Chinese factory activity data and gloomy demand at short-term valley that weighed on sentiment.
The Caixin/S&P Global Purchasing Managers’ Index (PMI) fell to 49.5 in April from 50.0 the previous month, missing expectations by 50.3 in a Reuters poll and marking the first contraction since January.
This came after the official manufacturing PMI unexpectedly fell to 49.2 from 51.9 in March.
September’s top-traded iron ore on the Dalian Commodity Exchange (DCE) finished daytime trading down 2.31% at RMB 698.5 a ton, the lowest since December compared with 13% in April.
June’s benchmark iron ore on the Singapore exchange hit a five-month low of $99.2 a ton but then managed to rebound to $100 a ton. This came after the contract fell nearly 18% last month.
“Hopes that China’s reopening and April-June construction season would boost steel consumption have faded,” analysts at National Australia Bank said in a statement.
“Downstream demand (for steel products) proved weak towards the end of April, and steel inventories are likely to build up again in the rainy season (in southern China), which will limit demand (for steel )”, Sinosteel analysts in a note.
Source: Terra
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