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Iron ore futures prices extended losses for a second straight session on Tuesday to their lowest level in nearly one week on signs of softening in the steel market due to subdued demand in top consumer China.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) DCIOcv1 ended daytime trade down 1.91% at 849 yuan ($117.17) a metric ton, its lowest since April 17.
The benchmark May iron ore SZZFK4 on the Singapore Exchange slipped 2.88% to $112.85 a ton, as of 0702 GMT, also the lowest since April 17.
The momentum of steel consumption in the world’s second-largest economy since early April has slowed down after some southern regions in China were hit by earlier-than-expected rains.
“Steel consumption was suppressed in the short term as rainy weather hit southern regions, which also dented speculative buying,” analysts at Huatai Futures said in a note.
Further, high inventory and thinning spot buying interest after some mills stockpiled volumes during the May Day holiday weighed down prices of the key steelmaking ingredient, said analysts.
“The supply of iron ore is currently still higher than actual needs with continuous pick-up in portside stocks,” analysts at Jinrui Futures said in a note.
“Expectations of a faster issuance of special bonds and equipment upgrade, however, have yet to materialise,” they added.
Meanwhile, investors also await a politburo meeting, which is expected to take place in late April and may give clues on Beijing’s policy direction.
Other steelmaking ingredients on the DCE receded further, with coking coal DJMcv1 and coke DCJcv1 down 3.13% and 1.76%, respectively.
Steel benchmarks on the Shanghai Futures Exchange were lower. Rebar SRBcv1 fell 0.84%, hot-rolled coil SHHCcv1 and wire rod SWRcv1 shed 0.68%, and stainless steel SHSScv1 slid 2.28%.