Iron ore futures extended declines on Tuesday, as investors booked profits ahead of upcoming holidays in China and demandconcerns grew amid slowing restocking and loomingsteel production cuts in the world’s second-largest economy.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trading 1.64% at 841 yuan ($115.04) a metric ton, after a 2%decline on Monday.
Markets in top steel producer China will be closed for holidays during Sept. 29-Oct. 6.
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The benchmark October iron ore SZZFV3 on the Singapore Exchange was down 0.67% to$115.35 aton, as of 0709 GMT, the lowest level since Sept. 11.
“Prospects of weaker steel demand are raising concerns for production cuts in the fourth quarter, which would translate to lower iron ore demand,” ANZ analysts said in a note.
“Investors remain wary about the ongoing challenges in China’s property markets. Despite many stimulatory measures to revive the real estate industry, there have been minimal impacts on reviving property demand and investment.”
The property market is the largest steel consumer in China and its continued weakness has been a headwind for the ferrous market.
Other steelmaking ingredients also lost ground, with coking coal DJMcv1 and coke DCJcv1 on the DCE tumbling 3.93% and 4.37%, respectively.
Steel benchmarks on the Shanghai Futures Exchange also retreatedfurther.
Rebar SRBcv1 dipped 1.76%, hot-rolled coil SHHCcv1 fell 1.98%, wire rod SWRcv1 lost 4.32% and stainless steel SHSScv1 shed 0.99%.
Analysts at Mysteel consultancy said in a report that 58% of 92 downstream companies surveyed had no plans to restock steel products ahead of the holiday break.
This is because these companies are not optimistic about demand outlook, as there are fewer new infrastructure projects in the second half of the year, they added.
Source: Reuters (Reporting by Amy Lv and Dominique Patton in Beijing; Editing by Subhranshu Sahu and Varun H K)