Dalian and Singapore iron ore futures were subdued on Thursday amid worries that Chinese demand for the steelmaking ingredient will remain weak in the near term, overshadowing China’s stepped-up fiscal support for its flagging economy.
The most-traded January iron ore on China’s Dalian Commodity Exchange dipped 0.2 percent to 869 yuan ($118.75) per metric ton.
On the Singapore Exchange, the benchmark November iron ore contract was down 0.2 percent at $116.95 per ton.
The urgent concern is that Chinese steel mills might be prompted to curb production to comply with emission control protocols particularly during winter months, and to minimize losses amid weak sales, analysts said.
That, along with prevailing concerns about China’s property sector crisis, has kept iron ore’s gains muted in recent days, which were spurred by top iron ore consumer China’s additional fiscal measures to bolster economic growth.
“Questions remain over how quickly real demand will materialize as construction activity tends to decline over winter months,” Al Munro at broker Marex said in a note.
The China Iron and Steel Association (CISA) has said domestic crude steel production could drop in the last quarter of 2023 due to mandatory production cuts to control emissions and the regular pollution constraints during winter months, according to ING analysts.
