SINGAPORE: Dalian iron ore futures prices slid on Friday and were on track for weekly losses, as rising year-end seaborne shipments and tepid Chinese demand weighed on sentiment.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) traded 1.01% lower at 785.5 yuan ($111.11) a metric ton, as of 0320 GMT.
The contract is set to end the week down 0.88%.
The benchmark January iron ore on the Singapore Exchange was down 1.02% at $103.2 a ton, although it remains on track to end the week 1.43% higher.
With iron ore shipments expected to increase near the year-end, imported iron ore supply in top consumer China will loosen further in December with a marked rise in carrier arrivals, while demand for the steelmaking material is set to cool amid production cuts at steel mills, noted consultancy Mysteel.
Seaborne supply from top producer Brazil stood at nearly 34.5 million tons in November, up 2.93% year-on-year. Still, positive macro-economic signals and anticipated restocking demand among steelmakers will lend some support, Mysteel added.
“We see the iron ore market in a large surplus this year and see this surplus building over the next few years.
With Simandou online and China steel output on a structural decline, prices will eventually trade on fundamentals and trend closer to costs,“ said analysts from Citi.
The Simandou iron ore mine project is set to be the world’s largest mine for the highest grade of iron ore, key to the green transition in the global steel value chain, with annual production capacity expected at 120 million metric tons.
Other steelmaking ingredients on the DCE lost ground, with coking coal and coke down 0.51% and 0.31%, respectively.
Steel benchmarks on the Shanghai Futures Exchange all increased.
Rebar edged up 0.09%, hot-rolled coil climbed 0.15%, wire rod rose 1.32% and stainless steel strengthened 0.44%.
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