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Dalian and Singapore iron ore futures fell for a second session on Tuesday, pressured by higher shipments, weak steel demand in the traditionally peak construction season and lingering concerns about government intervention.
“The current apparent (steel) demand is weaker than expected, putting downward pressure on the raw materials market,” said a Tianjin-based iron ore analyst.
Market talks that China’s National Development and Reform Commission met with several futures companies in Beijing on Monday to discuss the iron ore market, have raised fears of more government action against hoarding and speculative activities, said analysts.
The most-traded May iron ore futures contract on the Dalian Commodity Exchange (DCE)DCIOcv1 ended daytime trading 2.06% lower at 881.5 yuan ($128.10) a tonne, the lowest since March 28.
On the Singapore Exchange, the benchmark May iron ore SZZFK3 was down 2.11% at $118.25 a tonne, as of 0700 GMT, after hitting a one-week low of $117.05.
Markets in China will be closed on Wednesday for a holiday.
Other steelmaking raw materials coking coal and coke fell sharply, dragged down by abundant supply and weak demand. Coking coal DJMcv1 slumped 3.51% and coke DCJcv1 lost 4.21%.
Some mills in northern China’s Hebei, Shanxi and Shandong provinces successfully lowered their coke purchase prices by 50-100 yuan a tonne, information from Mysteel consultancy showed.
“Spot prices slumped due to supply outpacing demand at the moment, putting pressure on the futures market as well. We expect the second round of proposal for (coke) price drop to be on the way,” said a Shanghai-based coking coal and coke analyst.
Prices of steel futures were also weaker. Rebar on the Shanghai Futures Exchange (ShFE) SRBcv1 declined by 2.19% to 4,018 yuan a tonne, hot-rolled coil SHHCcv1 shed 2.29%, wire rod SWRcv1 dropped 0.24% and stainless steel SHSScv1 dipped 0.95%.
Despite the current ferrous market weakness, some analysts expect steel demand to gradually pick up in April following the latest round of inclement weather that has hit many regions across China and affected construction activities.