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Dalian and Singapore iron ore futures slumped on Thursday, along with steel benchmarks in China as sentiment soured, mirroring a broader risk aversion triggered by fears of a banking crisis.
Top steel producer China’s reported plan to again cut annual crude steel production this year also weighed on iron ore and other steelmaking ingredients, along with tepid Chinese property sector data.
The most traded May iron ore on China’s Dalian Commodity Exchange ended daytime trade 2.8% lower at 902 yuan ($130.75) a tonne after earlier hitting 897.50 yuan, its weakest since March 9.
On the Singapore Exchange, the benchmark April iron ore was down 2.9% at $128.35 a tonne, as of 0700 GMT.
“The international macro volatility has intensified,” Sinosteel Futures analysts said in a note.
Asian stocks slid and investors turned to the safety of gold, bonds and dollars, as embattled lender Credit Suisse became the latest focal point for fears of a banking crisis.
Also, “policy risks continue to increase”, adding to iron ore’s price volatility, Sinosteel analysts added.
China will again cut annual crude steel production in 2023, making it the third consecutive year that the government has mandated an output limit in line with its emission reduction programme, Bloomberg News reportedon Wednesday.
No official announcement has been made about the plan.
In the absence of any official directive on production restrictions, and with the overall outlook positive for China’s economic rebound this year, Sinosteel said there was a “high probability” that steel mills will maintain “a stable increase in production” during the first half of 2023.
Rebar on the Shanghai Futures Exchange shed 3.5%, hot-rolled coil also fell 3.5%, wire rod tumbled 4.6%, while stainless steel dropped 1.1%.
On the Dalian exchange, coking coal and coke slumped 4.5% and 3%, respectively.