Dalian iron ore futures snapped a six-session rally to fall on Thursday, hurt by a bleak outlook for global steel demand and as China simplified its customs inspections on imports of the steel-making commodity.
Iron ore on the Dalian Commodity dropped 0.3% to 705.50 yuan ($99.30) a tonne as of 0232 GMT, after advancing 12% over the last six sessions. The Singapore Exchange’s front-month contract fell 0.4% to $93.51 a tonne.
“Iron ore’s recent rally looks increasingly stretched, with strengthening headwinds in the steel industry likely to put downward pressure on prices in the coming months,” commodity strategists at ANZ wrote in a note.
The market faces downside risks such as the sharp fall in global steel demand this year, as well as increased iron ore exports from Brazil and Australia when the pandemic eases, the ANZ strategists said.
Meanwhile, China’s General Administration of Customs said it would streamline iron ore imports and skip sampling inspection of product quality to improve trade facilitation.
The move further hindered the six-session rally in iron ore prices that had been driven by China ramping up output after demand recovered in the wake of easing coronavirus-related curbs.
Hopes of more government stimulus to prop up the world’s no. 2 economy and virus-led supply concerns from major iron ore producer Brazil had further fuelled the rally.
Benchmark spot 62% iron ore bound for top steel producer China climbed to $98.20 a tonne on Wednesday, the highest since Aug. 6, SteelHome consultancy data showed.