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Dalian, SGX iron ore benchmarks dip more than 3%
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China warns against excessive speculation in iron ore
(Updates prices)
By Enrico Dela Cruz
Feb 2 (Reuters) - Iron ore futures fell to a two-week
low on Thursday as traders reassessed demand prospects in key
consumer China, despite expectations for more policy stimulus to
support the country's economic rebound.
Iron ore and steel prices in China hit multi-month highs in
January as markets rallied from early November on the back of
Beijing's stepped-up policy support for its ailing property
sector and dismantling of strict COVID-19 curbs.
The steelmaking ingredient has risen more than 9% this year on the Singapore Exchange, while steel benchmarks in China, the world's biggest producer of the construction and manufacturing material, has also posted monthly gains since November. Steel prices are "running strongly under the support of cost and positive expectations," Huatai Futures analysts said in a note. But analysts said the demand-side support for iron ore needed to be verified. China's imports and exports are facing an "extremely severe" environment due to rising risks of a global recession and slowing external demand, a government official said on Thursday. The most-traded May iron ore on China's Dalian Commodity Exchange ended daytime trade 3.3% lower at 841.50 yuan ($125.29) a tonne. It earlier hit 839 yuan, its weakest since Jan. 18. SGX iron ore's benchmark March contract fell as much as 3.8% to $121.20 a tonne. Other Dalian steelmaking inputs also dropped, with coking coal slipping 0.4% and coke down 2.2%.
On the Shanghai Futures Exchange, rebar shed 2%,
hot-rolled coil lost 1.8%, wire rod slipped
0.6%, while stainless steel dipped 3.4%.
"We believe more stimulus and infrastructure spending could
be unveiled at the National People's Congress in March, which is
likely to boost demand for commodities further," said ING
commodities strategist Ewa Manthey.
However, analysts said Chinese regulators, who have warned
against excessive iron ore price speculation, may step in to
manage any potential upward pressure on commodity inflation.
(Reporting by Enrico Dela Cruz in Manila; Editing by Subhranshu
Sahu)
