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Iron ore’s losses deepened on Thursday, with the benchmark price of the steelmaking ingredient in Singapore hitting a fresh 2022 low, hammered by a gloomy outlook for global steel demand and supply-side pressures.
Steel prices in China, which accounts for about half the world’s output of the construction and manufacturing material, also fell amid a worsening COVID-19 situation in Beijing.
The most-traded January iron ore on China’s Dalian Commodity Exchange DCIOcv1ended daytime trade 3.1% lower at 667 yuan ($92.27) a tonne, after touching its weakest since Sept. 5 at 664 yuan.
On the Singapore Exchange, the benchmark November iron ore SZZFX2 contract tumbled up to 2.8% to $89.50 a tonne, a new low for this year.
The World Steel Association now expects a 2.3% contraction in global steel demand this year, revising its forecast from a 0.4% growth.
The Brussels-based group said the global economic environment has deteriorated significantly, citing high inflation and interest rate hikes, and China’s slowdown due to its zero-COVID policy and property sector downturn.
“The slump in the property market has deepened, with investment in real estate slowing to its worst in 30 years,” the group said in a report on Wednesday.
“Despite the government’s efforts to boost the real estate market, a major turnaround is not expected since buyers’ confidence remains weak due to strict COVID-19 measures and developer bankruptcies.”
Supply-side pressures intensified.
This week major miners BHP Group and Vale reported higher quarterly iron ore production, while Rio Tinto posted a 4% quarter-on-quarter rise in shipments.
Rebar on the Shanghai Futures Exchange fell 1.9%, hot-rolled coil dipped 1.8%, and wire rod shed 1%. Bucking the trend, stainless steel advanced 2.3%.
Other steelmaking inputs also dropped, with Dalian coking coal and coke down 2.1% and 3.1%, respectively.