Iron ore futures slumped to fresh four-month lows on Monday as weak steel demand in China prompted a production slowdown, while major miners’ latest reports signalled ample supply of the steelmaking ingredient.
The most-traded September iron ore on China’s Dalian Commodity Exchange fell as much as 3.7 percent to 717 yuan ($103.90) a ton, its weakest since Dec. 21.
On the Singapore Exchange, benchmark May iron ore dropped as much as 3.5 percent to $104.35 a ton, the lowest since Dec. 19.
Steel benchmarks on the Shanghai Futures Exchange also dipped, with rebar shedding 3.6 percent to its weakest since Nov. 28, while hot-rolled coil lost as much as 3.5 percent to its lowest since Dec. 2.
“Despite the construction season underway (in China), steel prices have continued to fall amid weak demand and rising inventories,” ANZ commodity strategists said in a note.
More than 40 percent of steel furnaces in Tangshan, China’s largest steel-producing city in Hebei province, have gone into maintenance, reducing iron ore demand, they said.
“There were promising signs of better production discipline among Chinese rebar producers over the past week, as mills began reacting to highly negative margins,” Navigate Commodities managing director Atilla Widnell said. — Reuters
