BEIJING: Iron ore futures slid on Monday, dragged down by heightened supply pressure, while traders gauged soft steel demand in top consumer China with weak construction activities dampening domestic consumption.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) ended morning trade 1.62% lower at 730 yuan ($101.65) a metric ton.
The contract hit an intraday low at 725.5 yuan a ton, its lowest level since Aug 15, 2023.
The benchmark September iron ore on the Singapore Exchange was down 1.93% at $98.95 a ton, as of 0341 GMT, after hitting the lowest since July 31 at $98.45 a ton earlier in the session.
“Supply pressure aggravated amid persistent increase in shipments,” analysts at Everbright Futures said in a note.
“The issuance pace of new special bonds in July remained slow, weakening expectations for (steel demand from)infrastructure sector,” they added.
Special bonds are typically used to fund infrastructure projects.
Ore demand will continue falling as a sharply shrinking profitability among steelmakers spurred a wave of production halts, according to analysts at First Futures.
Around 95% Chinese steelmakers are operating at a loss, data from consultancy Mysteel showed.
Other steelmaking ingredients on the DCE lost ground, with coking coal and coke down 2.43% and 3.09%, respectively.
Steel benchmarks on the Shanghai Futures Exchange posted losses amid feeble demand. Rebar fell 1.83%, hot-rolled coil shed 2.06%, wire rod dropped 1.83% and stainless steel lost 1.26%.
“The conflict between supply and demand caused by the switch to the new rebar standards has not been fully resolved and we expect the ferrous market to undertake further downward pressure in the near term in the absence of beneficial news,” analysts at Jinrui Futures said in a note.