Iron ore futures prices slid on Monday after some investors and traders liquidated long positions to cash in profits on bets of faltering consumption amid seasonally slack steel demand in top consumer China.
Meanwhile, global iron ore shipments climbed 8.4% week-on-week to about 33.27 million tons in the May 20-26 period, data from consultancy Mysteel showed, further weighing on prices.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trade 1.1% lower at 899 yuan ($124.10) a metric ton.
The benchmark June iron ore on the Singapore Exchange was 1.16% lower at $119.4 a ton, as of 0706 GMT.
A seasonally slowing demand for steel products will also drag down consumption for iron ore, analysts at Sinosteel Futures said in a note. A seasonal decline in construction activity due to hot weather usually weighs on steel demand.
“Meanwhile, the global weekly iron ore shipments have been above 30 million tons for five straight weeks, and shipments from some mainstream suppliers are gradually swinging back into the uptrend. High supply and relatively weak demand jointly contributed to the persistent pick-up in portside inventories,” Sinosteel added.
Weighing on sentiment is also a loss of 22.22 billion yuan in the first four months in the steel industry, even as China’s industrial profits swung back into positive territory in April, data from the country’s National Bureau of Statistics showed.
Other steelmaking ingredients on the DCE also lost ground, with coking coal and coke down 2.83% and 0.76%, respectively.
Most steel benchmarks on the Shanghai Futures Exchange were down on lower raw materials prices and slowing downstream demand.
Rebar lost 0.61%, hot-rolled coil fell 0.67%, wire rod dropped 0.85%, while stainless steel added 0.65%.
“Steel demand has somewhat receded with transaction volumes falling and destocking slowing down,” analysts at Everbright Futures said in a note.
($1 = 7.2441 Chinese yuan)
(Reporting by Amy Lv and Emily Chow; Editing by Sohini Goswami and Eileen Soreng)
