MANILA: Iron ore futures fell on Thursday following gains earlier this week, as weak China trade data overshadowed a jump in August imports of the steelmaking raw material and a move by state lenders to cut mortgage rates to revive the property sector.
The pullback also came amid market talks about a notice from China’s National Development and Reform Commission to discuss iron ore prices with some futures companies. The state planner has yet to respond to Reuters’ request for comment.
In the absence of a meaningful improvement in domestic steel demand, the price rally in iron ore - from the lows in May - and other steelmaking ingredients has squeezed steel mills’ margins, analysts said.
The most-traded January iron ore on China’s Dalian Commodity Exchange ended daytime trade 1.9% lower at 836.50 yuan ($114.18) per metric ton.
On the Singapore Exchange, the benchmark October iron ore contract was down 1.9% at $114.05 per ton, as of 0742 GMT, after a three-day advance.
Top global steel producer China’s exports and imports extended declines in August due to sagging overseas demand and weak consumer spending at home, although the falls were slower than expected. Traders shrugged off news that four of China’s major state banks will lower interest rates on existing mortgages for first-home loans. While China’s policy measures for property developers should provide support to iron ore, an immediate recovery for the sector is not expected, analysts said.
Iron ore prices will probably track lower this month after rising in August, when China ramped up imports of the material amid strong demand ahead of its peak construction season, as the negative steel margins may dampen demand, consultancy Mysteel said.
Steel benchmarks in Shanghai were mostly down. Rebar shed 0.4%, hot-rolled coil dropped 0.7%, wire rod climbed 4.8% and stainless steel lost 0.4%. Coking coal and coke dropped 0.3% and 0.4%, respectively.
Comments
Comments are closed.