Iron ore futures contracts fell on Wednesday as investors turned cautious about possible downside risks after stimulus announced the previous day in China, the ore’s main consuming market, failed to meet expectations.
Benchmark iron ore for January on the Singapore Exchange fell 2.06% to $133.3 a tonne.
May’s most traded iron ore on China’s Dalian Commodity Exchange (DCE) ended the day 1.35% lower at 948 yuan ($131.94) a ton.
“Chinese leaders have disappointed the market without calling for major stimulus measures,” analysts at ANZ Bank said in a note.
The country will step up policy adjustments to support economic recovery in 2024, state media said, citing the annual central economic work conference held on Dec. 11-12.
“It is normal to see a downward price correction as the latest wave of price increases was mainly driven by strong macroeconomic stimulus expectations,” said Chu Xinli, a Shanghai-based China Futures analyst.
Steelmakers have preferred to buy port cargoes on a “word of mouth” basis rather than placing orders for expensive ocean cargoes at narrow margins, said Pei Hao, an analyst at Shanghai-based international brokerage FIS.
“This is partly why you see a steeper decline in the Singapore benchmark.”
Steel benchmarks on the Shanghai Futures Exchange fell across the board as cost-side support waned and demand softened after the latest cold snap halted construction activity in many regions of northern China.
Chinese authorities have warned that most of the country will face heavy snow and low temperatures this week, in what could be one of the coldest Decembers in China in decades.
Source: Terra
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