Benchmark iron ore futures in China dived to its daily trading limit yesterday and fell below 600 yuan (R1 441) per ton for the first time in nearly a year, due to loose supply conditions and poor demand outlook.
Shipments from major miners in Australia and Brazil have been stable at relatively high levels. Iron ore exports from the two countries increased by nearly a million tonnes, to 23.96 million tonnes, as of November 1, data from Mysteel consultancy showed.
Data from the consultancy also showed yesterday that iron ore inventories at 45 ports in China jumped to 146.5 million tonnes this week, up 4.05 million tonnes from the week earlier.
The demand side of raw materials, however, remained cool on steel production controls and sluggish downstream consumption.
“Affected by heating season and winter Olympics (controls), molten iron output is hard to increase and could stay weak in short-to-medium term,” SinoSteel Futures wrote in a note.
Zhuo Guiqiu, analyst with Jinrui Capital, also noted daily molten iron production was at much lower level compared with same period in the past two years.
“Steel products consumption also failed market expectation due to slack property market and infrastructure constructions,” Zhuo added.
The most actively traded iron ore futures on the Dalian Commodity Exchange, for January delivery, plummeted 10 percent the daily trading limit to 565.5 yuan per tonne, their lowest level since November 18, 2020.
Spot prices of iron ore with 62 percent iron content for delivery to China fell $9.5 to $107 per tonne on Monday, data from SteelHome consultancy showed.
REUTERS