Iron ore futures prices experienced a decline on Tuesday amid a growing risk-off sentiment, driven by unfavorable fundamentals of the key steelmaking ingredient and underwhelming downstream steel consumption in China, the world’s top consumer. The most-traded May iron ore contract on China’s Dalian Commodity Exchange concluded morning trading 2.3% lower at 826.5 yuan ($115.52) per metric ton, following a previous week’s rise of 6.1% on Friday. Similarly, the benchmark April iron ore on the Singapore Exchange slid by 2.54% to $105.8 per ton.
Analysts attributed the price correction to the lack of significant improvement in market fundamentals, with ore shipments remaining high and hot metal output growing at a slower-than-anticipated pace. Data from the China Iron and Steel Association revealed a slight decrease in daily pig iron output among surveyed steelmakers, contributing to subdued market sentiment. Additionally, dwindling buying interest in the seaborne market post-re-stocking by steelmakers further weighed on market outlook. Seaborne iron ore transition volumes plummeted by 73.4% from the previous Friday to 380,000 tons on Monday, according to Mysteel data.
The downturn in iron ore prices also impacted other steelmaking ingredients, with coking coal and coke prices declining on the DCE. Steel benchmarks on the Shanghai Futures Exchange registered broad losses, with rebar, hot-rolled coil, wire rod, and stainless steel prices all trending lower. Analysts noted that a shortage of capital has contributed to a slowdown in infrastructure and property projects in the first quarter of 2024, impacting steel demand and iron ore consumption in the market.