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Iron ore dipped on Thursday, with Dalian futures retreating from a more-than-two-week high and the Singapore benchmark contract sinking back below $100 a tonne on scepticism over prospects of demand recovery in China.
The most-traded September iron ore on China’s Dalian Commodity Exchange ended daytime trade 3.5% lower at 698.50 yuan ($101.05) a tonne. It climbed to 733 yuan on Wednesday, its strongest since April 24.
On the Singapore Exchange, iron ore’s benchmark June contract SZZFM3was down 3.7% at $99.50 a tonne, as of 0720 GMT.
Prices of the steelmaking ingredient rebounded earlier this week following cumulative heavy losses since last month.
The prices were propped up by expectations of expanded stimulus for China’s economy amid a patchy recovery and a challenging outlook due to external headwinds.
Data on Thursday showed China’s consumer prices rose at the slowest pace in more than two years in April, while factory gate deflation deepened, suggesting more stimulus may be needed to boost an uneven post-COVID economic recovery.
Iron ore prices also received an extra boost from reports that some of China’s steel mills were set to resume production following maintenance shutdown, and its confirmation of steel output cuts, which supported steel prices and steel mills’ margins.
“We believe the rally in iron ore is unsustainable, as we don’t expect a quick turnaround in steel demand amid a weak property market in China,” Citi analysts said in a note.
Rebar on the Shanghai Futures Exchange shed 2.7%, hot-rolled coil dipped 3%, wire rod slumped 4.5%, and stainless steel lost 1.4%.
Coking coal and coke on the Dalian exchange dropped 1.3% and 2.4%, respectively.
Steel mills in North China’s Hebei and East China’s Shandong provinces lowered coke procurement prices by another 100 yuan a tonne on May 10, marking the seventh round of price cut since April, according to consultancy and data provider Mysteel.