BEIJING: Iron ore futures prices slid on Thursday as investor sentiment dampened after state media in top consumer China emphasized qualitative improvements ahead of a long-anticipated meeting that is expected to set the tone for economic growth next year.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trade 1.17% lower at 800.5 yuan ($110.14) a metric ton. The benchmark January iron ore on the Singapore Exchange was down 1.51% at $103.75 a ton, as of 0700 GMT.
China is not wedded to achieving specific GDP growth rates, and a pace of less than 5% for the economy is acceptable as there is no need for the “worship of speed”, state newspaper People’s Daily said on Wednesday. China’s Central Economic Work Conference will meet this month, at a yet-to-be-announced date, and top leaders will set economic growth targets and plan next year’s agenda.
Investors and traders had been expecting Beijing to roll out more stimulus, said analysts.
“We think iron ore is currently overvalued. Therefore, a downward correction is unavoidable,” said Cheng Peng, an analyst at Sinosteel Futures. The anticipation of growing shipments, driven by rebounding prices and some miners’ motivation to meet annual targets, is also weighing on prices, said analysts.
China’s Dalian Commodity Exchange said on Wednesday it would lower the daily price limits, or the maximum trading range, to 9% from 11% and adjust trade margins for speculative transactions to 11% from 15%, effective from the settlement on Dec. 6. “The move will increase speculative transactions, which will likely lift price volatility,” analysts at Jinyuan Futures said in a note.
Expectations of winter stocking among steelmakers and resilient demand in winter had pushed prices of the key steelmaking ingredient up by nearly 2% from Monday to Wednesday.
Other steelmaking ingredients on the DCE fell, with coking coal and coke down 2.42% and 0.96%, respectively. Steel benchmarks on the Shanghai Futures Exchange were weaker. Rebar lost 1.41%, hot-rolled coil shed 1.53%, wire rod slipped 2.59% and stainless steel slid 2.02%.
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