Benchmark iron ore futures in Singapore dipped on Monday, struggling below the $100 a tonne mark under the weight of growing shipments from Australia and Brazil combined with the sluggish demand in top steel producer China.
The steelmaking ingredient’s most-traded June contract on the Singapore Exchange shed as much as 1.7% to hit $97.05 a tonne.
It slumped to $94.20 on Friday after data showed China’s factory activity unexpectedly dipped in April, based on Caixin Manufacturing PMI data, sending shockwaves through the market.
Iron ore on China’s Dalian Commodity Exchange, however, was supported after hitting a five-month low on Friday and with steel benchmarks in Shanghai rebounding following sell-offs.
Dalian iron ore’s most-active September contract was up 2.2% at 702 yuan ($101.48) a tonne by 0247 GMT.
Portside offtakes of iron ore in China may continue to contract in tandem with Chinese blast furnace capacity utilization and operating rates this week, Navigate Commodities Managing Director Atilla Widnell said.
Iron ore reaches new five-month low on renewed US bank crisis worries, weak fundamentals
Combined with rising iron ore arrivals, China’s portside iron ore inventory may thus materially expand, he said.
“As we move deeper into Q2, we estimate there’s potentially more scope to the downside as Australian and Brazilian iron ore shipments expand at a faster pace quarter on quarter,” Widnell said.
“One possible saving grace for iron ore demand could be the prospect of grossly understocked (Chinese) blast furnaces rebuilding relatively low inventories with more affordable material,” he said.
The China Iron and Steel Association, however, has urged domestic steelmakers to cut production to help ensure a stable cash flow, dimming iron ore restocking prospects.
Iron ore could find a floor near $95 a tonne, according to ANZ commodity strategists.
Rebar on the Shanghai Futures Exchange rose 3.2%, hot-rolled coil climbed 3.7%, and stainless steel gained 1.1%.
However, coking coal and coke on the Dalian exchange slipped 0.8% and 0.2%, respectively.
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