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Iron ore futures prices slipped to their lowest levels in more than six weeks on Monday, as signs of weakening steel demand in top consumer China broadly weighed on sentiment.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE)
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ended daytime trade 2.65% lower at 843.5 yuan ($116.42) a metric ton, the lowest since April 17.
The benchmark July iron ore (SZZFN4) on the Singapore Exchange slid 3.3% to $111.35 a ton, as of 0715 GMT, also the lowest since April 17. Prices slid more than 4% last week.
The pressure on prices is due to the seasonally softening downstream steel demand, coupled with weakening fundamentals of the key steelmaking ingredient, analysts at Sinosteel Futures said in a note.
China’s manufacturing activity unexpectedly fell in May, an official factory survey showed on Friday. However, a private sector survey showed on Monday that manufacturing activity grew at the fastest pace in about two years last month.
The contrast pointed to a mixed picture of the sprawling industry.
“The trading logic of iron ore in June will be the gaming of two factors: a possibly improved macroeconomic policy will lift its valuation, while the control over crude steel output will affect steel balance sheet and weigh on sentiment,” analysts at Galaxy Futures said in a note.
China’s finance ministry has allocated 6.44 billion yuan to subsidise auto trade-ins in 2024, state television reported on Monday.
Other steelmaking ingredients on the DCE were mixed, with coking coal climbing 0.86% and coke (DCJcv1) down 1.71%.
Steel benchmarks on the Shanghai Futures Exchange were weaker amid lower raw materials prices.
Analysts at Jinrui Futures forecast China’s crude steel consumption in 2024 will fall by 1.3% year-on-year.