BEIJING: Iron ore futures prices fell on Thursday to their lowest in nearly a month, as concerns about demand prospects in top consumer China and the US Federal Reserve’s outlook for interest rate cuts next year weighed on sentiment.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trade 1.08% lower at 778.5 yuan ($106.66) a metric ton, after hitting the lowest since Nov. 22 at 767.5 yuan earlier in the session.
The benchmark January iron ore on the Singapore Exchange shed 0.43% to $102.25 a ton by 0700 GMT. It touched the lowest level since Nov. 25 at $100.9 earlier. “We’ve long anticipated this correction, as the sentiment-driven bubble around China’s Central Economic Work Conference was eventually going to burst with no concrete stimulus measures outlined until March 2025,” said Atilla Widnell, managing director at Navigate Commodities.
“This week has seen a perfect storm of loosening supply - and demand-side fundamentals with BHP resuming production from its South Flank mine in Western Australia while mills in China are also heard to be scaling back production.” BHP, one of the world’s leading iron ore suppliers, resumed operations at two mines in Western Australia after a pause due to heavy rains, alleviating supply worries.
“Also, fears over the health of China’s property sector are rearing their ugly head as financial markets question the liquidity and solvency of China Vanke - the last remaining (state-owned) jewel in this sector’s crown,” Widnell said.
The Fed commentary that next year will see fewer rate cuts also pressured broad commodities, said analysts. Other steelmaking ingredients on the DCE retreated, with coking coal and coke down 3.65% and 0.9%, respectively.
Most steel benchmarks on the Shanghai Futures Exchange lost ground. Rebar lost 1.5%, hot-rolled coil slid 1.55%, and stainless steel fell 0.92% while wire rod added 0.14%.
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