BEIJING: Iron ore futures lost ground on Monday as lingering fears of further government intervention in top consumer China and anticipation of reduced demand amid production restrictions in northern regions undermined investor sentiment.
The most-traded January iron ore on China’s Dalian Commodity Exchange (DCE) ended daytime trading 1.14% lower to 958 yuan a metric ton, the lowest since Nov. 30. The benchmark January iron ore on the Singapore Exchange slid 2.14% to $128.35 a ton, as of 0707 GMT.
The state-backed DCE said on Nov. 30 that it would continue to strengthen its supervision of iron ore futures, following a flurry of warnings from the state planner to enhance market regulation.
Also, the expectation of falling demand in the short term following the latest restrictions on production in north China, coupled with squeezed steel margins and fears of enhanced intervention from authorities, weighed down prices of the key steelmaking ingredient.
A few cities in northern China, including the country’s top steel production hub Tangshan, started a level 2 emergency response, which typically requires mills to restrict production, amid a forecast of heavy air pollution over the weekend.
“Rising raw materials have prevented steel margins from expanding, which dented mills’ interest in restocking,” analysts at Huatai Futures said in a note.
“Some mills have implemented annual maintenance on their blast furnaces,” they added. Resilient demand and worry about tight supply, however, prevented prices from tumbling too much, said analysts. “A lack of growth in supply is keeping the market tight,” analysts at ANZ Bank said in a note.
Other steelmaking ingredients posted losses, with coking coal and coke on the DCE tumbling 5.41% and 3.05%, respectively. Lower raw materials prices drove steel benchmarks on the Shanghai Futures Exchange down.
Rebar fell 1.39%, hot-rolled coil declined 1.04%, stainless steel shed 1.23%, while wire rod added 3.52%. The market awaits a batch of import and export data due this Thursday for directions.
Comments
Comments are closed.