Iron ore crashes on economic gloom, supply pressures

Iron ore futures fell on Friday, with the steelmaking ingredient sinking below $80 a tonne in Singapore and leading a decline in the iron ore market in China spurred by a gloomy outlook for the global steel demand and supply pressures.

Singapore’s most traded November iron ore SZZFX2 fell as much as 3.6% to $78.80 a tonne, the lowest since 2020. It was down 2.2% at 79.90 dollars, at 0801 GMT, and has fallen more than 50% from its April high above $160.

On China’s Dalian Commodity Exchange, the most active January contract DCIOcv1 ended the day’s trade 4.9 percent lower at 624.50 yuan ($86.31) a tonne, en route to its third consecutive weekly decline.

Meanwhile, local iron ore fell this week to its lowest level since May 2020 below $90 a tonne SH-CCN-IRNOR62 as negative margins prompted Chinese steelmakers to rein in production.

The International Monetary Fund said it does not expect a quick fix to China’s housing crisis.

New COVID-19 lockdowns in China, expectations of further US interest rate hikes and signs of increased iron ore supply also added to pressure on prices.

Australian group Fortescue Metals FMG.AX reported a 4.2 percent year-on-year rise in quarterly shipments, while quarterly output VALE3.SA from Brazil’s Vale SA grew 1.1 percent.

“Weakness in the Chinese property market remains a headwind for steel and iron ore,” ANZ commodity strategists said in a note. “Supply issues have also weighed on the market.”

Other steelmaking inputs also extended losses, with Dalian coking coal DJMcv1 and coke DCJcv1 down 2% and 2.6%, respectively.

Ferrous metals on the Shanghai Futures Exchange fell, with rebar SRBcv1 down 2.8%, hot-rolled coil SHHCcv1 and wire SWRcv1 down 3% and 2.2%, respectively. SHSScv1 stainless steel was down 2.9%.
Source: Reuters (Reporting by Enrico Dela Cruz in Manila; Editing by Savio D’Souza and Sherry Jacob-Phillips)

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