Iron ore
futures fell on Thursday, with the Dalian benchmark contract hitting an
eight-week low, as slumping industrial profits in top steel producer China
added to a gloomy demand outlook for steelmaking ingredients.
Oct 27(Reuters) - Iron ore futures fell on Thursday, with
the Dalian benchmark contract hitting an eight-week low, as slumping industrial
profits in top steel producer China added to a gloomy demand outlook for
steelmaking ingredients.
The most-traded January iron ore on China's Dalian Commodity
Exchange DCIOcv1 ended
morning trade 2.3% lower at 655.50 yuan ($90.90) a tonne, after touching its
weakest since Sept. 2 at 654 yuan.
On the Singapore Exchange, benchmark November iron ore SZZFX2 hit
a contract low of $85.75 a tonne, down 0.9%.
Profits
at China's industrial firms fell 2.3% in the first nine months of 2022 from a year
earlier, dropping at a faster clip, as COVID-19 curbs and a property slump
dampened factory activity.
"Virus risks will continue to loom over industrial profit growth into
year-end," Westpac analysts said in a note.
Dalian iron ore has tumbled about 26% from a June peak of 890
yuan, while benchmark 62%-grade iron ore's spot price for the China-bound
material sank to an 11-month low of $92 on Wednesday, based on SteelHome
consultancy data. SH-CCN-IRNOR62
Analysts said Chinese steel demand is unlikely to rebound
significantly as long as the real estate sector remains depressed.
"Despite a gradual and mild improvement in property sales
data, we do not think investors' confidence will pick up anytime soon,"
J.P.Morgan analysts said in a note.
"Expectation for stronger/nationwide easing is muted, as
there is no change in policy narrative after the National Congress, home price
remains weak, (and) investors' confidence on developers' liquidity remains
low."
Other Dalian steelmaking inputs also remained under pressure,
with coking coal DJMcv1 and
coke DCJcv1 shedding
0.5% and 1.1%, respectively.
On the Shanghai Futures Exchange, ferrous metals eked out small
gains after recent losses. Rebar SRBcv1 rose 0.3%, hot-rolled coil SHHCcv1 gained
0.2%, wire rod SWRcv1 climbed
0.8%, and stainless steel SHSScv1 added 0.3%.
(Reporting by Enrico Dela Cruz in Manila; Editing by Neha Arora)
((enrico.delacruz@thomsonreuters.com))
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