BEIJING- Iron ore futures prices drifted lower on Tuesday, as wider losses induced production cuts among steelmakers in top consumer China and lingering high portside inventories weighed on sentiment.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) bucked the recent uptrend to slide 0.97 percent to 766.5 yuan ($107.18) a metric ton, after climbing nearly 2 percent on Monday.
The benchmark September iron ore on the Singapore Exchange was 0.64 percent lower at $103.15 a ton.
Prices of the key steelmaking ingredient were hit by receding near-term buying appetite after more Chinese steelmakers recorded loss, said analysts.
“We expect hot metal output to see more significant drops this week as more mills suffered losses…and the iron ore market has not yet to enter the cycle of destocking,” analysts at Galaxy Futures said in a note.
Average daily hot metal output among steelmakers surveyed fell by 1.2 percent on the week to around 2.36 million tons in the week to Aug. 2, the lowest since early June, while profitability slipped to 6.5 percent from 15 percent in the prior week, data from consultancy Mysteel showed.
“It’s a normal downward correction after a rapid price rally when fundamentals are not supportive,” said Cheng Peng, a Beijing-based analyst at Sinosteel Futures.
