BEIJING: Iron ore futures tumbled on Monday as traders assessed concerns over weaker-than-expected steel consumption in peak construction season, completion of pre-holiday restocking, and possible output restrictions among mills in winter in top consumer China.
The most-traded January iron ore on China’s Dalian Commodity Exchange (DCE) was down 2.03% at 844.5 yuan ($115.60)a metric ton, as of 0215 GMT. The benchmark October iron ore on the Singapore Exchange was 3.24% lower at $117.25 a ton. Several factors jointly contributed to the broad weakness in raw materials, said Pei Hao, a Shanghai-based analyst at international brokerage firm FIS.
“It becomes increasingly clear that demand has hit the ceiling amid weaker-than-expected steel sales for September and October, and after the replenishment of raw materials to meet production needs over the upcoming week-long holiday break came to an end,” he added.
China will begin a week-long holiday to celebrate its Mid-Autumn festival and National Day from Sept. 29. Weighing on prices of the key steelmaking ingredient are also “concerns of tighter monetary policy”, analysts at ANZ bank said in a note.
The US Federal Reserve officials on Friday flagged further rate hikes even after voting to hold the benchmark federal funds rate steady at a meeting this week, with three policymakers saying they remain uncertain the inflation battle is finished.
The embattled real estate developer China Evergrande said it was unable to issue new debt due to an investigation into one of its subsidiaries, dealing a fresh blow to its restructuring plans. Other steelmaking ingredients also receded, with coking coal and coke on the DCE down 1.11% and 0.78%, respectively.
The drop in coal prices came despite all coal mines in Panzhou city having suspended production for a day, according to consultancy Mysteel, after 16 people were killed in a coal mine accident on Sunday. Steel benchmarks on the Shanghai Futures Exchange were down due to subdued raw materials prices and demand.
Rebar lost 1.17%, hot-rolled coil dipped 0.8%, wire rod declined 1.17% and stainless steel edged down 0.56%.
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