Iron ore set for weekly loss as soft China steel prices hurt demand prospects (updated)

China Steel

16/08/2024 08:30

(Updates closing prices)
    By Amy Lv and Mei Mei Chu
       BEIJING, Aug 16 (Reuters) - Iron ore futures fell for a
fifth straight session on Friday, heading for a second weekly
loss, with bearish sentiment prevailing after
weaker-than-expected steel prices in top consumer China hurt the
demand outlook. 
    The most-traded January iron ore contract on China's Dalian
Commodity Exchange (DCE)  DCIOcv1  ended daytime trade 0.99%
lower at 697 yuan ($97.16) a metric ton. 
    It posted a fall of 6.1% from last Friday's close and a
decline of 26% so far this year.
    The benchmark September iron ore  SZZFU4  on the Singapore
Exchange slid 1.39% to $92.25 a ton, as of 0715 GMT, recording a
loss of 8.7% so far this week. 
    A steeper-than-expected fall in steel prices in China has
undermined sentiment, pressuring demand and prices for
steelmaking ingredients including iron ore, said analysts. 
     Rebar  SRBcv1 , mainly used in the construction sector,
slumped to the lowest since June 2017 during this week while
hot-rolled coil  SHHCcv1 , typically used in the manufacturing
area, tumbled to the lowest since April 2020.
    They closed daytime trade 0.71% and 1.8% lower,
respectively. 
    Analysts at Macquarie said in a note that "55% of steel
mills experienced decreased domestic orders into August compared
to prior 30% ... property remains the main drag among end-user
sectors". 
    "Steel mills showed less interest in restocking raw
materials." 
    Average daily hot metal output among steelmakers surveyed
extended falls into a third straight session, down 1.3% from the
previous week to around 2.29 million tons as of Aug. 16,
according to data from consultancy Mysteel.
     Profitability among mills shrank to 4.76% from 5.19%
previously, the data showed. 
    The conflict of a mismatch between supply and demand eased
to some extent after ore prices touched the key production cost
threshold of $90 a ton for some overseas miners, analysts at
Huatai Futures said in a note.  
    Other steelmaking ingredients on the DCE were mixed, with
coking coal  DJMcv1  rising 0.15% while coke  DCJcv1  shed 2.3%.
    The other two steel benchmarks on the Shanghai Futures
Exchange, wire rod  SWRcv1  dipped 0.13% while stainless steel
 SHSScv1  added 0.52%.

($1 = 7.1736 Chinese yuan)

 (Reporting by Amy Lv and Mei Mei Chu; Editing by Devika
Syamnath and Janane Venkatraman)
 ((Amy.Lv@thomsonreuters.com;))