Iron ore futures extended losses on Thursday, with the Dalian benchmark touching a fresh two-week low, as China’s rising port inventories and softening physical demand for steel products weighed on sentiment.
The most-traded January 2021 contract for the steelmaking ingredient on China’s Dalian Commodity Exchange closed 2.2% lower at 787.50 yuan a tonne. The contract dropped to 783.50 yuan earlier in the session, its weakest since Sept. 30.
The Singapore Exchange’s front-month November contract slipped 0.6% to $114.45 a tonne by 0708 GMT, stretching losses into a fourth straight session.
“Fundamentals … looked shaky, especially with regards to the growing port inventories,” said Howie Lee, an economist at OCBC Bank in Singapore.
Portside iron ore stocks in top steel producer China rose to a seven-month high of 123.6 million tonnes last week, SteelHome consultancy data showed. SH-TOT-IRONINV
As major suppliers Australia and Brazil continued to ramp up shipments, and with current Chinese demand for steel products and raw materials relatively soft, stocks may continue piling up.
China’s high steel output, coupled with slow destocking, have recently bloated domestic inventories, pressuring prices.
FUNDAMENTALS
– China is reportedly set to issue new steel scrap standards in a move that will allow materials meeting them to enter the country after a ban on solid waste imports goes into effect.
– Rebar on the Shanghai Futures Exchange slipped 0.3%, while hot-rolled coil slumped 1.2%. Stainless steel gained 0.3%.
– BHP Group has received deferment requests from Chinese coal customers amid reports that China had stopped accepting Australian coal.
– China’s coal markets are set to tighten over the remainder of 2020 as stringent import restrictions curb supply at a time of robust demand from heavy industry, and with the winter heating season about to kick in.
– Dalian coking coal ended flat while coke dropped 0.3%.
Source:Reuters
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