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Iron ore futures fell on Monday, with Singapore iron ore clinging to a narrow lead above the $100 per metric ton support level, as expectations of steel output cuts in China and weakness in the country’s property segment weighed on sentiment.
The most-traded January iron ore on China’s Dalian Commodity Exchange DCIOcv1 dipped 0.4% to 725 yuan ($99.88) per metric ton.
On the Singapore Exchange, the benchmark September iron ore SZZFU3 slumped 2.4% at $100.3 metric ton, as of 0730 GMT, shedding gains from the prior session.
The Singapore contract earlier dipped below the psychological threshold to $99.90.
Expectations of crude steel cuts in China have hit sentiment.
“[Citi’s] industry discussions suggest that crude steel control targets will likely be finalised by Aug. 15, and local governments and mills could make their own production control plans thereafter,” the bank said in a note, mirroring earlier concerns from the southwestern Yunnan province.
“This is supportive of steel margins, but likely has negative implications for iron ore. However, the actual impact will still depend on how local governments enforce cuts amid the weak macro environment,” the analysts added.
Steel benchmarks on the Shanghai Futures Exchange mostly fell. The most-active rebar contract SRBcv1 dropped 0.8%, hot-rolled coil SHHCcv1 lost 0.8%, wire rod SWRcv1 slid 0.3%, but stainless steel SHSScv1 rose 2%.
Steelmaking ingredient Dalian coking coal DJMcv1 and coke DCJcv1 fell 1.2% and 1.1%, respectively.
Lacklustre Chinese demand and property market deterioration also added pressure.
China’s new bank loans tumbled in July and other key credit gauges also weakened despite policymakers cutting interest rates and vowing to roll out more support for the faltering economy.
Chinese property giant Country Garden’s 2007.HK debt problems deepened after its onshore bonds were suspended, sending its shares plunging 16% to a record low on Monday.