Iron ore futures in China touched a three-week low in early trade on Friday, on track for their second weekly decline, as prospects of easing winter demand for steel weighed on prices of the key raw material.
Dalian Commodity Exchange’s most-traded iron ore contract, with January 2020 expiry, fell 2.4% to 602.50 yuan ($86.37) a tonne, its weakest since October 18.
On the Singapore Exchange, the front-month December contract slipped 1.0% to $79.50 a tonne.
“Steel demand is slowing down due to the weather issue. In the northern part of China, the temperature is dropping, and very soon construction activities will be halted in many areas,” a Shanghai-based trader said.
Plentiful iron ore supply is also weighing on both futures and spot prices, the trader said.
Benchmark spot 62% iron ore for delivery to China SH-CCN-IRNOR62 was steady for a third day session at $83.50 a tonne on Thursday, the weakest since Jan. 29 this year, data from SteelHome consultancy showed.
Imported iron ore inventories at Chinese ports are hovering around a six-month high, estimated at 131.65 million tonnes as of last Friday, based on SteelHome data. SH-TOT-IRONINV
The downbeat outlook for global steel demand is also a major concern for the industry and market participants, the trader said.
ArcelorMittal, the world’s largest steelmaker, has cut its forecasts for demand in its main U.S. and European markets.
Chinese steel demand is forecast to rise just 1% next year, compared with this year’s projected growth of 7.8%, according to the World Steel Association, attributing the slowdown largely to the U.S.-Sino trade war.
* The most-traded construction steel rebar on the Shanghai Futures Exchange was 0.8% down, as of 0252 GMT.
* Hot-rolled steel coil, used in cars and home appliances, slipped 1%.
* Shanghai stainless steel lost 0.4%.
* Dalian coking coal edged down 0.6%, while Dalian coke lost 0.3%
* Coal traders in China are holding off purchasing from overseas despite the upcoming heating season, as spreads between domestic and seaborne coal prices narrow and import rules tighten at Chinese customs.
Reporting by Enrico dela Cruz, Editing by Sherry Jacob-Phillips