Iron ore prices
tumbled on Monday, weighed by a gloomy demand outlook in China, where many
steel mills are nursing losses and cutting production.
Benchmark 62% Fe fines
imported into Northern China fell 4.41%, to $109.89 per tonne.
The most-traded September iron
ore contract on China’s Dalian Commodity Exchange ended daytime trade 5.8%
lower at 719.50 yuan ($107.49) a tonne, extending losses to a third session and
touching its lowest since June 23.
Mining
stocks also slid, with Vale down 3.5% from the previous week, Rio Tinto down
3.69%, and Fortescue down 6.16%.
Chinese
mills have idled dozens of blast furnaces as stocks piled up after domestic
demand weakened, hit by covid-19 restrictions and bad weather.
The
rising prospect of a global recession also weighed on sentiment and China’s
deliberate move to curb steel output under its decarbonization plan.
“We
expect iron ore futures will trade lower this week given these overwhelming
price negative factors,” said Atilla Widnell, managing director at Navigate
Commodities in Singapore.
Cities
in eastern China tightened covid-19 curbs on Sunday as coronavirus clusters
emerge, posing a new threat to China’s economic recovery under the government’s
strict zero-covid policy.
Resurgent
iron ore shipments from Australia and Brazil, causing China’s portside
inventory to rise last week after declining for eight straight weeks, and
Chinese property developer Shimao Group missing a bond repayment, also fuelled
the sell-off.
“Given
that Chinese blast furnaces will likely continue exercising better production
discipline, we anticipate that iron ore port stocks should extend inventory
builds this week,” Widnell said.
Nearly
90% of Chinese steelmakers suffered losses from weak sales and low prices,
according to Chinese industry data provider Mysteel.