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Iron ore futures prices languished on Thursday, with lingering concerns over demand in top consumer China acting as a headwind, despite Beijing’s latest pledge of equipment upgrades that capped some losses earlier in the session.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trade 2.62% lower at 798 yuan ($110.94) a metric ton, the lowest since Aug. 22, 2023. It posted a fall of 17% since the end of the Lunar New Year (LNY)holiday break.
The benchmark April iron ore on the Singapore Exchange slipped 2.37% to$103.05 aton, as of 0710 GMT, the lowest since Aug. 17. It has fallen over 18% after the LNY break.
Market participants are closely monitoring possible signs for a turnaround with eyes on hot metal output change, said analysts.
“Hot metal output still hovered at a low level suppressed by low steel margins and bearish expectations,” analysts at Huatai Futures said in a note.
It is not easy to see ore prices fall below $100 a ton in the short run as mills’ in-plant inventories are low and the downstream sectors still have needs for restocking, analysts at First Futures said in a note.
The pace at which prices fell slowed, however, partly due to China’s latest move to prop up its sputtering economy.
China’s cabinet on Wednesday issued details of its plan to promote large-scale equipment upgrades and sales of consumer goods.
“This is undoubtedly good for the market as it could offset some demand reduction from the construction area, but it still depends on the actual implementation of the policy to see the actual impact,” said Kevin Bai, a Beijing-based analyst at consultancy CRU Group.
Other steelmaking ingredients on the DCE posted further losses, with coking coal DJMcv1 and coke DCJcv1 down 3.67% and 1.77%, respectively.
Steel benchmarks on the Shanghai Futures Exchange were broadly weaker. Rebar SRBcv1 fell 2.96%, hot-rolled coil SHHCcv1 lost 2.55%, wire rod SWRcv1 shed 2.61% and stainless steel SHSScv1 slid 1.17%.
“Construction steel is the largest drag for the whole ferrous market,” Huatai analysts added.