Dalian and Singapore iron ore futures widened losses below a key support level of $90 per tonne on Thursday, as slumping industrial profits and fresh COVID-19 lockdowns in top steel producer China weighed heavily on sentiment.
The most-traded January iron ore on China’s Dalian Commodity Exchange DCIOcv1 ended daytime trade 4.1% lower at 643.50 yuan ($89.29) a tonne, after touching its weakest since July 25 at 642.50 yuan.
On the Singapore Exchange, benchmark November iron ore SZZFX2 hit a contract low of $82.85 a tonne, down 4.3%.
Profits at China’s industrial firms fell 2.3% in January-September from a year earlier, dropping at a faster clip, as COVID-19 curbs and a property slump dampened factory activity.
“Virus risks will continue to loom over industrial profit growth into year-end,” Westpac analysts said in a note.
Several Chinese cities are doubling down on COVID-19 curbs, sealing up buildings and locking down districts to halt widening outbreaks.
Dalian iron ore has tumbled about 28% from a June peak of 890 yuan, while benchmark 62%-grade iron ore’s spot price for the China-bound material sank to an 11-month low of $92 on Wednesday, SteelHome consultancy data showed.
China’s property sector woes also persist.
“Despite a gradual and mild improvement in property sales data, we do not think investors’ confidence will pick up anytime soon,” J.P.Morgan analysts said in a note.
“Expectation for /nationwide easing is muted, as there is no change in policy narrative after the National Congress, home price remains weak, (and) investors’ confidence on developers’ liquidity remains low.”
Other Dalian steelmaking inputs also fell, with coking coal DJMcv1 and coke DCJcv1 shedding 1.5% and 1.9%, respectively.
Ferrous metals on the Shanghai Futures Exchange reversed early gains. Rebar SRBcv1 fell 0.7%, hot-rolled coil SHHCcv1 lost 0.6%, wire rod SWRcv1 slipped 0.1%, and stainless steel SHSScv1 dropped 0.9%.
