(Reuters) – Dalian iron ore futures rose in range-linked trading, while Singapore’s benchmark slipped on Wednesday, under pressure from concerns about the demand outlook for the steel raw material in China’s main steel producer.
The most-traded iron ore in September on China’s Dalian Commodity Exchange ended daytime trading up 0.8% to 1,219.50 yuan ($ 188.36) per tonne.
The most active August iron ore contract on the Singapore Stock Exchange was down 0.5% to $ 209.15 per tonne, at 0706 GMT.
“There are the first signs of a turning point in Chinese demand with falling Chinese steel prices crushing steel mill margins,” said Justin Smirk, senior economist at Westpac in Sydney.
Falling cement prices in China, rebar manufacturers may begin to suffer losses, and May excavator sales posting the first monthly decline since early 2020 indicate a slowdown in construction activity which was also hampered by inclement weather, Smirk said.
China’s steel exports also remained weak, affected by weak demand in Southeast Asian countries – its biggest buyers of building and manufacturing materials – due to a new wave COVID-19 infections in the region, consulting firm Mysteel reported.
Concerns over China’s efforts to cut steel production this year in order to meet its carbon emissions target have also kept market participants largely at bay.
Iron ore supply constraints, meanwhile, kept spot prices down, with particularly stronger support for high-quality materials, as China’s intense emissions control campaign pushed producers of steel to use high grade and environmentally friendly ore.
Graph: THE GAP IS WIDELING BETWEEN HIGH AND LOW-GRADE IRON ORE IN CHINA –
Rebar on the Shanghai Futures Exchange rose 2.9%, while hot-rolled coils jumped 2.6%.
Shanghai stainless steel climbed 4.1% to 17,965 yuan per tonne, its highest level since stainless steel contracts began trading on the Shanghai Stock Exchange in 2019.
Strong demand and low inventories in China have pushed up prices for stainless steel, analysts at Huatai Futures said in a note.
Dalian coking coal advanced 3.8% and coke 2.7%.
Report by Enrico Dela Cruz in Manila; Editing by Subhranshu Sahu and Sherry Jacob-Phillips