Iron ore widens decline in Dalian due to weakening steel market and demand scenario

Dalian iron ore futures prices fell for a fourth straight session on Wednesday, pressured by a weakening steel market and lingering concerns about demand in China, the ore’s main consumer market.

The September contract for the most traded iron ore on China’s Dalian Commodity Exchange (DCE) ended the day down 1.65 percent at 775.5 yuan ($106.61) a tonne.

The contract hit a low of 771.5 yuan per tonne early in the session, its lowest level since April 8.

Singapore Exchange benchmark iron ore for August rose 0.21% to $100.8 a tonne.

Most steel benchmarks on the Shanghai Futures Exchange posted losses. Both rebar and hot-rolled coils fell nearly 1.1%, wire rod fell close to 1%, while stainless steel rose 0.57%.

Weak profit margins for steelmakers due to falling steel prices have raised concerns about reduced demand for iron ore in the near term, Chinese consultancy Mysteel said.

According to data from the World Steel Association, China’s steel production fell 1.1% from a year earlier to 530.6 million tonnes in the first half of 2024.

The lack of further support for China’s property sector after last week’s key policy meeting triggered more selling, while easing supply-side concerns also weighed on the sector, ANZ analysts said.

Global iron ore miners, particularly in Australia and Brazil, increased their shipments in June and posted better quarterly performance, Mysteel added.

However, an unexpected drop in inventories last week limited losses on iron ore prices, ANZ analysts added.

According to Steelhome data, total iron ore stocks at Chinese ports decreased by 0.4% from the previous week, reaching 149.6 million tonnes on July 19.

Source: Terra

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