Iron ore prices dropped on Tuesday, weighed down by easing steel demand in China due to unfavorable weather and threats of market intervention by Chinese authorities.
According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $212.33 a tonne on Tuesday, down 2.7% from Monday’s closing.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange ended daytime trading 2.7% lower at 1,153 yuan ($178.57) a tonne, after four sessions of gains.
Spot prices of steel construction materials fell further on Monday on weak demand, according to Chinese data provider Mysteel consultancy.
Daily trading volumes of construction steel including rebar, wire rod and bar-in-coil among China’s 237 traders surveyed by Mysteel shrank 17,608 tonnes to 193,481 tonnes on Monday due to hot and humid weather.
Last week, China’s state planner and market regulator looked into the spot market at the Beijing Iron Ore Trading Center and said they would closely monitor prices and investigate malicious speculation.
“Subdued prices in the next six months may be expected as a result of active government intervention, but (iron ore) may test $250/mt when Chinese buyers look to replenish depleted stockpiles,” said Howie Lee, an economist at OCBC Bank in Singapore.
Imported iron ore stocked at Chinese ports had dropped for a fourth straight week to 123.95 million tonnes as of Friday, hitting the lowest level since early October.
“Weekly Australian iron ore shipments have been disappointing through June, creating a tighter global supply-demand balance – not to mention the revolving door of incidents in Brazil,” said Atilla Widnell, managing director at Navigate Commodities in Singapore.
Sentiment across China’s ferrous metals complex was also hit as steel mills have been ordered to limit or suspend their operations to minimise smog during the Communist Party centenary celebration in Beijing on Thursday, Sinosteel Futures analysts said in a note.
(With files from Reuters)