Iron ore futures prices continued their downward trend on Wednesday, driven by ongoing worries about demand in China, the leading consumer, amidst a lack of substantial policy measures to stimulate steel consumption. The most-traded May iron ore contract on China’s Dalian Commodity Exchange closed morning trade 2.69% lower at 812.5 yuan ($112.41) per metric ton, while the benchmark April iron ore on the Singapore Exchange was down 1.09% at $103 per ton.
Analyst Cheng Peng from Sinosteel Futures in Beijing attributed the pressure on iron ore prices to weak steel prices, narrow steel margins, and elevated ore shipments, which have dampened demand and prices. Projections indicate a decrease in average daily hot metal output in April compared to the previous year, further impacting iron ore demand. Supply-side factors continue to weigh on ore prices as both overseas and domestic ore shipments have rebounded recently, with expectations of increased shipments from major exporters like Australia and Brazil by the end of the quarter. Despite better-than-expected industrial profit data in China, showing a 10.2% increase in profits for the first two months of the year, iron ore prices remain under pressure.
The decline in iron ore prices also influenced other steelmaking ingredients, with coking coal and coke prices registering declines. Soft demand and lower raw material costs contributed to a drop in steel benchmarks on the Shanghai Futures Exchange, with various steel products like rebar, hot-rolled coil, wire rod, and stainless steel experiencing losses amid weaker steel demand and slow destocking processes.