Iron ore futures in Asia fell on Thursday, pressured by the prospects of a slowdown in demand for the steelmaking ingredient in top buyer China, and despite tempered shipment expectations from its biggest producer, Rio Tinto.
The most-traded iron ore for September delivery on China’s Dalian Commodity Exchange slumped 2.5 percent to 1,105 yuan ($170.67) a ton by midday break, extending losses into a third straight session.
Iron ore’s most-active September contract on the Singapore Exchange shed 3.5 percent to $188.60 a ton.
Rio Tinto expects its iron ore shipment this year to be at the low end of the forecast range, which remains subject to weather and market conditions.
Australia’s Fortescue Metals Group Ltd meanwhile beat its full-year shipment estimate with a total volume of 182.2 million tons, and set shipment guidance for fiscal 2022 at 180 million tons to 185 million tons.
BHP Group Ltd reported full-year iron ore production near the top end of its forecast range, thanks to record output at two mines in Western Australia.
This week’s generally upbeat quarterly production reports from major miners come as China has intensified its de-carbonization drive, asking steel mills to limit this year’s output to no more than the 2020 volume.
“We think it is reasonable to expect second-half steel production growth in China will slow down meaningfully from the first half,” JPMorgan analysts said in a note.
China’s crude steel output in the first half grew nearly 12 percent compared with a year earlier.
However, JPMorgan expects Chinese demand to recover strongly in the fourth quarter, leading to a strong rebound in both steel prices and margins.
Construction steel rebar on the Shanghai Futures Exchange rose 0.5 percent, while hot-rolled coil jumped 1.4 percent. – Reuters
