Iron ore futures prices extended their decline into a second straight session on Tuesday, dragged by expectations of growing supply, although resilient demand from top consumer China and hopes of easing Sino-US trade tensions curbed losses.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) closed daytime trade 0.85% lower at 698.5 yuan ($97.16) per metric ton.
The benchmark July iron ore on the Singapore Exchange was down 0.63% to $94.1 a ton, as of 0700 GMT after hitting the lowest since June 3 at $93.9 earlier in the session.
Shipments of the key steelmaking ingredient from top suppliers Australia and Brazil climbed nearly 2% from the prior week to 29.19 million tons as on June 8, the highest level for a single week since December, data from consultancy Mysteel showed.
Iron ore imports in June are set to rise as mills have increased the usage of imported cargoes due to their price competitiveness and as miners will ramp up shipments by the month-end to achieve quarterly targets, analysts at consultancy Shanghai Metals Market said in a note.
“Given that steel margins remained healthy, hot metal output is likely to consolidate at a high level,” analysts at Hongyuan Futures said in a note.
Hot metal output is typically used to gauge iron ore demand, with the daily average at 2.42 million tons, as of June 5, 2.6% higher than the same period a year before, according to Mysteel data.
Additionally, investors are hoping that the US and China would improve ties as they enter another round of trade talks among in London on Tuesday.
Other steelmaking ingredients on the DCE posted gains, with coking coal and coke up 0.51% and 0.48%, respectively.
Steel benchmarks on the Shanghai Futures Exchange traded in a tight range. Rebar and hot-rolled coil were little changed, wire rod ticked 0.12% lower and stainless steel fell 1.46%.
($1 = 7.1889 Chinese yuan)
(Reporting by Amy Lv and Lewis Jackson; Editing by Harikrishnan Nair)
