Benchmark iron ore futures in China dropped on Tuesday on concerns of declining steel demand due to construction slowdowns caused by poor weather and the COVID-19 pandemic.
The most-actively traded iron ore futures on the Dalian Commodity Exchange, for September delivery, closed down 0.5% to 745 yuan ($105.38) a tonne, extending losses for a second straight session.
Prices for the 62% iron-content ore for delivery to China settled at $101 per tonne on Monday, down 2.9% from $104 on June 2, data tracked by SteelHome consultancy showed.
Summers in China are typically a slow period for steel demand as heavy rains and heat interfere with construction. China, the world’s biggest steel consumer, is forecasting a number of storms in its eastern coastal provinces this week.
“The current demand for steel products has weakened and apparent consumption is slumping and the off-peak season is having a relatively big impact on the market”, said Huatai Futures in a note.
For the second quarter, however, iron ore prices jumped 28.6%, fuelled by supply concerns from big miners amid the virus as well as robust consumption from China’s infrastructure stimulus.
Huatai noted that iron ore shipments from Brazil may rise in the next period after resuming mining activities, but global shipments still face risks on possible increasing maintenance in Australia in July.
Shipments of the steelmaking ingredient departing for China were at 83.24 million tonnes so far in June, compared with a 93.15 million tonnes a month earlier, vessel-tracking data compiled by Refinitiv showed.