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Iron ore futures slumped on Tuesday, with the Dalian benchmark contract hitting a seven-week low, while prices in Singapore sank below $89 a tonne as China’s steel demand season draws to an end with a disappointing outcome.
The most-traded January iron ore on China’s Dalian Commodity Exchange ended daytime trade 1.9% lower at 669.50 yuan ($91.64) a tonne, after touching its weakest since Sept. 2 at 662.50 yuan.
On the Singapore Exchange, the steelmaking ingredient’s benchmark November contract was down 2.4% at $88.50 a tonne by 0705 GMT, after hitting an 11-month low of $88.20 earlier in the session.
In the spot market, benchmark 62%-grade iron ore also continued to languish below $100 a tonne, off around 40% its 2022 peak at slightly above $160.
“The peak season is coming to an end. The previously expected demand recovery did not meet expectations, let alone exceed expectations,” Huatai Futures analysts said in a note.
Steel demand in top producer China, particularly from the construction sector, usually picks up in September and October.
“The market’s confidence in steel prices has weakened,” Huatai analysts said, with overall sentiment likely to remain depressed as a global recession looms, dampening demand for commodities.
Dalian coking coal DJMcv1 and coke DCJcv1 dipped 4% and 1.8%, respectively, as easing supply concerns added pressure.
Steel prices on the Shanghai Futures Exchange were mostly lower, with rebar SRBcv1 shedding 1.7%, hot-rolled coil SHHCcv1 dropping 1.1% and wire rod SWRcv1 falling 1.4%. Stainless steel SHSScv1 climbed 1.3%.
Uninspiring Chinese economic data and a sliding Chinese yuan CNY=CFXS added to the bearish mood prevailing after the Chinese Communist Party Congress.
“The Party Congress outcomes suggest little chance of a near term change in policy,” said National Australia Bank economist Taylor Nugent, citing China’s zero-COVID policy and a top governing body stacked with President Xi Jinping’s loyalists.