BEIJING- Iron ore prices dropped as tepid near-term demand and a higher-than-expected increase in portside inventory in top consumer China undermined investor sentiment and dented buying appetite for the key steelmaking ingredient.
The most-traded May iron ore on China’s Dalian Commodity Exchange (DCE) ended daytime trading 1.38 percent lower at 1,000 yuan ($139.56) a metric ton. It closed the week with a rise of nearly 3 percent .
The benchmark February iron ore on the Singapore Exchange dropped 1.87 percent to $138.5 a ton, shedding 0.2 percent for the week.
“It’s a normal downward correction after sentiment cooled as the market has digested the news of PSL,” said Chu Xinli, a Shanghai-based analyst at China Futures.
China’s central bank made 350 billion yuan in loans to policy banks through its pledged supplementary lending (PSL) facility in December, which is believed to support ore and steel demand.
“Weighing on prices is also receding ore demand as reflected by the persistent fall in hot metal output, which is currently lower than a year-ago level,” Chu added.
Average daily hot metal output among mills surveyed slipped for a tenth consecutive session by 1.4 percent on the week to 2.18 million tons, as of Friday, which is also down 1.2 percent from the same period a year ago, data from consultancy Mysteel showed.
