Iron ore futures experienced a sharp decline to their lowest level in more than two weeks, driven by a buildup of inventory at Chinese ports and concerns surrounding the demand outlook. Despite this, the market saw some support from property support measures in China.
The most-traded September iron ore on China’s Dalian Commodity Exchange dropped by 1.6% to 857 yuan per metric ton, marking its lowest point since April 24. However, it managed to recover slightly, closing 0.3% higher at 873.50 yuan.
Analysts at Huatai Futures noted that seasonal constraints among major iron ore suppliers had eased, leading to an accumulation of iron ore port inventory in China. This, coupled with the recent decline in iron ore futures, has resulted in steel mills showing reluctance to purchase high-priced resources.
While iron ore prices saw a significant drop in the first quarter of this year, they have rebounded by 16% in the second quarter. Despite this, Citi analysts predict that the property downturn in China will continue to weigh on iron ore demand.
In a move to boost real estate markets, major Chinese cities Hangzhou and Xian lifted all home purchase restrictions. Market participants anticipate that China’s iron ore imports will reach a record high this year, supported by strong domestic demand and imports from nations like India and Ukraine.
The benchmark June iron ore contract on the Singapore Exchange edged up 0.3% to $116 a ton, while other steel-making ingredients saw declines. Coking coal on the DCE was down 1% at 1,753.50 yuan per ton, and coke fell 1.5% to 2,269 yuan. Steel benchmarks on the Shanghai Futures Exchange displayed mixed results.
