Iron ore futures prices remained subdued on Thursday, as ongoing apprehensions regarding demand from China, the largest consumer, acted as a restraining force. Nevertheless, losses were curtailed by Beijing’s recent commitment to equipment upgrades.
The primary iron ore contract for May on China’s Dalian Commodity Exchange (DCE) concluded the morning session 1.22% lower at 809.5 yuan ($112.57) per metric ton, marking a decline of 16% since the conclusion of the Lunar New Year holiday. Meanwhile, the benchmark April iron ore on the Singapore Exchange dipped 0.85% to $104.65 per ton, as of 0335 GMT.
Analysts noted that market participants are attentively observing any indications of a potential reversal, particularly focusing on changes in hot metal output. “Hot metal output continues to linger at a subdued level due to weak steel margins and pessimistic outlooks,” remarked analysts at Huatai Futures in a report.
According to analysts at First Futures, the likelihood of ore prices dropping below $100 per ton in the near term appears slim, as in-plant inventories at mills remain low, and downstream sectors still require restocking.
The deceleration in the pace of price declines can be attributed, in part, to China’s recent measures to boost its faltering economy. The Chinese cabinet unveiled specifics of its initiative to promote large-scale equipment upgrades and consumer goods sales on Wednesday.
“This initiative is undoubtedly favorable for the market as it has the potential to offset some of the demand contraction from the construction sector. However, its actual impact will hinge on the effective implementation of the policy,” remarked Kevin Bai, a Beijing-based analyst at consultancy CRU Group.
Other key steelmaking components on the DCE recorded further declines, with coking coal and coke falling by 3.7% and 1.72%, respectively. Meanwhile, steel benchmarks on the Shanghai Futures Exchange exhibited broad weakness, with rebar down by 2.05%, hot-rolled coil declining by 1.84%, wire rod shedding 0.54%, and stainless steel sliding 1.42%.
“Construction steel remains the primary drag on the entire ferrous market,” emphasized analysts at Huatai.
