Dalian iron ore futures edged higher on Friday after a record 10-session slide, but prices in Singapore remained pressured by a gloomy outlook for demand from top steel producer China.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange DCIOcv1 ended wobbly daytime trade 1% higher at 736 yuan ($109.90) a tonne. The benchmark contract has slumped 11% this week, its steepest since mid-February.
On the Singapore Exchange SZZFN2, the steelmaking ingredient’s front-month July contract was down 1% at $115 a tonne, as of 0709 GMT.
SGX iron ore climbed 7.4% on Thursday, rebounding from this year’s weakest close in the previous session, after Chinese President Xi Jinping pledged to take more effective measures to achieve the country’s economic and social development goals.
Xi’s remarks also buoyed the spot market, with the benchmark 62%-grade iron ore bound for China trading at $117.50 a tonne on Thursday. It had dropped to $112.50 the day before, the lowest since Dec. 10, according to SteelHome consultancy data. SH-CCN-IRNOR62
While “market confidence has been restored to a certain extent”, Sinosteel Futures analysts said the absence of any additional and specific economic stimulus measures from Beijing will limit any price gains for now.
In China’s steel production hub, Tangshan city, 56 of the 126 blast furnaces were shut for maintenance, according to Sinosteel, as mills struggled to cope with slumping margins amid weak demand and high inventories.
COVID-19 restrictions, which have put downward pressure on the property sector, and disruptions to construction activity caused by unfavourable weather are additional headwinds for China’s mammoth steel sector.
Construction steel rebar on the Shanghai Futures Exchange SRBcv1 rose 0.3%, while hot-rolled coil SHHCcv1 gained 0.1%. Stainless steel SHSScv1 slid 3.2%.
Dalian coking coal DJMcv1 dipped 0.9%, but coke DCJcv1 climbed 0.4%.
