SINGAPORE: Dalian iron ore futures prices extended losses on
Thursday, dragged down by the weakening steel market in top consumer China,
while investors awaited details of Beijing’s likely stimulus measures announced
at the Third Plenum meeting.
The
most-traded September iron ore contract on China’s Dalian Commodity Exchange
(DCE) ended morning trade 1.65% lower at 805.5 yuan ($110.99) a metric ton.
It hit an
intraday low of 798 yuan a ton earlier in the session, its lowest since June
26. The benchmark August iron ore on the Singapore Exchange was, however, up
0.1% at $105.15 a ton, as of 0427 GMT. Steel benchmarks on the Shanghai Futures
Exchange were pressured by lacklustre demand constrained by temperature and
heavy rains in some regions. Rebar and wire rod lost nearly 1.5%, hot-rolled
coil shed 1.1% and stainless steel dipped 0.5%.
Daily
transaction volumes of construction steel products shrank by 18% from Tuesday
to 95,300 tons on Wednesday, data from consultancy Mysteel showed.
The prospect
of mounting trade tensions between the US and China also weighed on investor
sentiment. The World Trade Organization said on Wednesday it was unable to get
a clear picture of China’s financial support for key industrial sectors,
including steel production, due to an “overall lack of transparency.”
In November,
if US presidential candidate Donald Trump wins and Republicans sweep through
Congress, Trump’s trade policy may include 10% tariffs on all goods imports
with 60% levies on Chinese products, and a four-year plan for phasing out
Chinese imports including steel, ING analysts said in a note.
Irrespective
of November’s election results, the US position towards China will likely
become more confrontational in 2025, with coordinated actions to address
industrial overcapacity, said J.P. Morgan analysts.
Other steelmaking ingredients on the DCE lost ground, with coking coal
and coke down 2.6% and 3.3%, respectively. Investors and traders are still
awaiting details on possible stimulus from the third plenum meeting of top
leaders that is scheduled to end on Thursday.