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Iron ore futures declined for a third consecutive session on Wednesday to hit their lowest level in nearly four months, as concerns lingered over near-term demand in top consumer China.
The most-traded May iron ore on China’s Dalian Commodity Exchange DCIOcv1 ended daytime trade 3.98% lower at 893 yuan ($124.29) per metric ton, the lowest close since Oct. 31, after a more than 5% drop the day before.
The benchmark March iron ore SZZFH4 on the Singapore Exchange was 1.8% lower at $118.65 a ton, as of 0702 GMT, also the lowest since Oct. 31.
Pressuring prices of the key steelmaking ingredient is growing supply at a time when a recovery in demand has been slower than expected after the week-long Lunar New Year holiday break, said analysts.
“Supply from major producers Brazil and Australia so far has hovered at a relatively high level compared to past years; the weather so far this year in major production hubs is better than the past five-year average,” said Pei Hao, a Shanghai-based analyst at international brokerage FIS.
“Weak profitability at many steel mills has limited an increase in ore demand in the near term.”
Stocks of the five major finished steel products held by traders in 132 cities nationwide had risen to a near 11-month high in the week ended Feb. 17, jumping 15.6% week-on-week, Mysteel’s latest survey found.
Other steelmaking ingredients on the DCE surged amid supply concerns, with coking coal DJMcv1 and coke DCJcv1 climbing 6.19% and 3.79%, respectively.
Steel benchmarks on the Shanghai Futures Exchange ticked up amid higher raw materials prices.
Wire rod SWRcv1 rose 1.21%, while rebar SRBcv1, hot-rolled coil SHHCcv1 and stainless steel SHSScv1 were little changed.