Dalian and Singapore iron ore futures fell on Thursday and were on track to post a quarterly loss due to persistent demand worries for the steel-making ingredient in top steel producer China.
The most-traded iron ore for September delivery on China’s Dalian Commodity Exchange dropped as much as 2.7 percent to 787 yuan a ton, after four straight sessions of gains, stretching its quarterly loss to about 11 percent.
On the Singapore Exchange, iron ore’s front-month July contract was down 1 percent at $121.55 a ton, and on pace to mark its third consecutive monthly fall.
Dalian iron ore hit this year’s peak at 948 yuan a ton on June 6, while SGX iron ore had risen up to $168.65 a ton on March 8, supported by hopes for additional stimulus for China’s struggling economy.
In the spot market, the benchmark 62 percent-grade iron ore bound for China, which traded at $124 a ton on Wednesday, based on SteelHome consultancy data, had fallen 24 percent from this year’s peak of $163 hit on March 7.
Strict anti-COVID measures in China and unfavorable weather conditions for construction activity weighed on ferrous markets in recent weeks, along with fading hopes of further economic support.
But positive signals from Chinese authorities helped iron ore regain some lost ground.
“China is becoming more willing to accept single-digit COVID cases,” said Iris Pang, ING chief economist in Greater China, citing moves to ease quarantine requirements for international arrivals and the scrapping or relaxing of testing mandates in several cities.
Pang said this reflects “a more flexible policy than back in early June”, although she warned that the risk of lockdowns still exists.
Construction steel rebar on the Shanghai Futures Exchange edged up 0.1 percent, while hot-rolled coil slipped 0.1 percent. Stainless steel rose 0.8 percent. – Reuters
