BEIJING: Iron ore futures prices retreated on Wednesday as weak economic data from top consumer China weighed on investor sentiment. The benchmark February iron ore on the Singapore Exchange slid 2.6% to $125.95 a metric ton, as of 0728 GMT.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trade 0.75% lower at 926 yuan ($128.67) a ton.
China’s economy grew 5.2% in the fourth quarter from a year earlier, official data showed on Wednesday, missing analysts’ expectations of 5.3% in a Reuters poll.
Meanwhile, China’s December new home prices fell at the fastest pace since February 2015, marking the sixth straight month of declines, data showed, with the sector still struggling due to weak confidence.
“It’s hard to see a marginal improvement in the fundamentals of ore as steel prices are weak and mills are still suffering losses,” said Cheng Peng, a Beijing-based analyst at Sinosteel Futures. However, some analysts expect support from pre-holiday replenishment from mills.
Steel mills in China still need to further pile up stock in the next two to three weeks for holiday preparations, Citi analysts said in a note.
Chinese steelmakers typically stockpile feedstocks from the spot market to meet production needs over the week-long Lunar New Year holiday break when logistics are disrupted.
Other steelmaking ingredients on the DCE were mixed, with coking coal down 0.22%, while coke nudged up 0.48%. Most steel benchmarks on the Shanghai Futures Exchange lost ground.
Rebar fell 0.65%, hot-rolled coil dipped 0.5%, wire rod shed 0.12% while stainless steel gained 1.41%. China’s crude steel output in 2023 was flat from a year earlier, official data showed, steadying after two consecutive years of decline, but confounding expectations of a first rise in three years.
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