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Iron ore futures in China sank on Thursday to a fresh one-year low, dragged down by a gloomy demand outlook for steel products and raw materials in the world’s biggest steel producer.
The most-traded iron ore for January delivery on the Dalian Commodity Exchange DCIOcv1 slumped as much as 4.6% to 514 yuan ($80.62) a tonne, falling for a fifth consecutive session to its lowest level since Nov. 9, 2020.
On the Singapore Exchange, iron ore’s front-month December contract SZZFZ1 dropped 2.9% to $86.20 a tonne.
“The price of iron ore has not yet bottomed out,” analysts at Zhongzhou Futures Co Ltd wrote in a weekly note, citing continuing steel production curbs in China in line with its decarbonisation goals and the turmoil in the country’s property sector.
“The profit of some steel mills turned negative, and the steel mills switched from administrative restriction of production to active maintenance,” they said.
China’s monthly steel production has been falling since July after seeing a double-digit growth in the first half of the year, as strict output controls and curbs on power usage dented both supply and demand.
The country’s crude steel output in January-October totalled 877.05 million tonnes, down 0.7% on an annual basis.
Rising iron ore supply, with imported materials stocked at Chinese ports swelling to a 31-month high of 147.60 million tonnes last week, according to SteelHome consultancy data, also added to the pressure on prices.
Benchmark 62%-grade iron ore’s spot price in China stood at $90.50 a tonne on Wednesday, hovering near an 18-month low of $90 hit on Monday as downstream demand remained weak.
Construction steel rebar on the Shanghai Futures Exchange SRBcv1 rose 1.3%, while hot-rolled coil SHHCcv1 climbed 0.9%. Stainless steel SHSScv1 fell 1.5%.
Dalian coking coal DJMcv1 slipped 0.9%, extending losses as supply concerns eased, while coke DCJcv1 gained 2.9%.