BEIJING: Futures prices of ferrous metals were broadly down on Wednesday as the weaker-than-expected economic data in China triggered a flurry of risk-off sentiment.
China’s factory activity contracted faster than expected in May on weakening demand with the official manufacturing purchasing managers’ index (PMI) at 48.8, below the 50-point mark that separates expansion from contraction, data from the National Bureau of Statistics showed on Wednesday.
The May number eyed a fall of 0.4 basis point from 49.2 in April and also missed the forecast of 49.4. Meanwhile, the PMI in the steel industry sank by 9.8 basis points month-on-month to 35.2 in May, according to data from CFLP Steel Logistics Professional Committee (CSLPC).
The disappointing manufacturing data contributed to the broad weakness in the ferrous market, according to analysts. Iron ore extended loss with the most-traded September iron ore on the Dalian Commodity Exchange (DCE) trading 1.89% lower at 700.5 yuan a tonne, as of 0354 GMT.
The benchmark June iron ore on the Singapore Exchange was 1.82% lower at $99.35 a tonne, as of 0413 GMT. The other steelmaking ingredients - coking coal fell 2.3% and coke dipped 2.7%. “Coking coal and coke tumbled more steeply than iron ore in this round of downtrend since late March; in comparison, iron ore showed more resiliency despite being in general on the fall as well,” said a Beijing-based steelmaking raw material analyst, who required anonymity as he is not authorised to speak to the media.
“The more significant falls from coal market left some room of profits for steelmakers, which became less willing to reduce output,” he added. Rebar on the Shanghai Futures Exchange declined by 1.38% to 3,435 yuan a tonne, hot-rolled coil lost 1.53%, wire rod shed 1.09% and stainless steel was 1.71% lower. “The downstream steel consumers still lack confidence at the moment and showed limited interest in building up their inventories,” analysts at Huatai Futures said in a morning note.
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