Prices of iron ore futures extended losses on Monday to their lowest levels in more than two months, pulled down by signs of dull steel consumption in top consumer China and a stronger U.S. dollar.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) closed daytime trade3.11% lower at 795.5 yuan ($109.55) a metric ton, at its lowest since April 9.
The benchmark July iron ore SZZFN4 on the Singapore Exchange fell 2.33% to $102.55 a ton, as the of 0724 GMT, the lowest since April 8.
Many regions have been hit by high temperatures and heavy rains, resulting in temporary suspension of activities in some construction sites, analysts at Everbright Futures said, adding that steel demand remained subdued, dragging down iron ore prices.
“Iron ore bulls have been stubbornly holding out hope in vain for any further supportive measures, which might support China’s crumbling property sector as the last bastion of hope for any potential recovery in construction activity,” said Atilla Widnell, managing director at Navigate Commodities.
“Unfortunately, all roads and metrics are leading towards a heavy contraction in sector activity for 2024. Moreover, looming domestic property developer liquidations and winding up orders now present previously unfathomable headwinds for local construction steel consumption.”
A firmer U.S. dollar weighed down broad commodities including iron ore and steel, said analysts, as a stronger greenback makes dollar-denominated commodities less attractive for holders of other currencies.
Other steelmaking ingredients on the DCE retreated further, with coking coal and coke down 2.34%and 2.14%,respectively.
Steel benchmarks on the Shanghai Futures Exchange were weaker. Rebar dropped 1.51%, hot-rolled coil shed 1.11%, wire rod SWRcv1 lost 2.07% and stainless steel was little changed.
“We do not think there will be a large room for a further decline in rebar price as it has been quite close to the production cost based on valley power cost and there is no big drag in fundamentals,” said Cheng Peng, a Beijing-based analyst at Sinosteel Futures.