SINGAPORE: Iron ore futures edged up on Friday, aided by stimulus expansion from top-consumer China, but were poised to end the week lower on sluggish Chinese consumption and softening demand for the steelmaking ingredient.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) ended morning trade 0.2% higher at 752 yuan ($102.57) a metric ton, declining 2.15% this week. The benchmark February iron ore on the Singapore Exchange eased 0.16% to $96.9 a ton at 0357 GMT, falling 1.17% this week.
Seasonal demand for steel has declined and the demand for steel raw materials is similarly low, Chinese consultancy Galaxy Futures said. Steel sales volume expectations have fallen dramatically, said Chinese consultancy Mysteel, quoting a report from China’s National Development and Reform Commission (NDRC).
“While a reduction in steel supply is expected this month as more steelmakers observe maintenance stoppages, the NDRC emphasised that this is unlikely to be enough to counterbalance the shrinking demand.” Still, demand from winter stockpiling is expected to provide some support to prices and the market is awaiting potential support from policy initiatives, Mysteel added.
Earlier this week, Beijing expanded its consumer trade-in scheme in an effort to revive demand in the sluggish household sector. Growth in China was estimated at 4.9% for 2024 and projected to be 4.8% this year, partly offset by subdued consumption growth and lingering property sector weakness.
Meanwhile, markets should avoid over-interpreting Beijing’s “moderately loose” monetary policy, Financial News, a publication backed by China’s central bank, said, citing economist Guan Tao. Other steelmaking ingredients on the DCE declined, with coking coal and coke down 1.05% and 0.59%, respectively.
Most steel benchmarks on the Shanghai Futures Exchange rose. Rebar closed 0.12% higher, hot-rolled coil climbed 0.15% and stainless steel gained 0.19%. Wire rod dipped 0.14%.
Comments