Iron ore headed for the lowest close since September on a seasonal slowdown in demand and signs Chinese mills are curbing steel output.
Futures fell for a fourth day in Singapore, sinking below $US93 a tonne. The rainy season in southern China, as well as high temperatures in the north, have persisted, slowing construction, Shanghai Metals Market said in a note.
On Monday, figures from China – the top iron ore importer – showed nationwide steel output in May was below April’s total on a daily basis, and almost 7 per cent less than a year ago. It was the weakest showing for the month since 2018. The steel-making staple has been under pressure in recent weeks as traders eye a slower pace of construction into the summer, as well as a push by authorities in China to curb steel output to combat a glut. Futures are coming off the back of a four-week losing run that was the longest since January.
“Steel demand in China is likely to remain weak over the coming months over the upcoming seasonal lull,” Citi said in a note, cutting iron ore forecasts. China’s property market weakness is showing no signs of a turnaround, and manufacturing faces increased trade headwinds, it said. The bank’s prompt-to-three-month price forecast was reduced to $US90 a tonne from $US100, while the six-to-twelve-month target was scaled back to $US85 from $US90.
On the supply side, miners in Brazil – the largest shipper after Australia – have been ramping up flows. Exports totalled 35.077 million tons in May, narrowly setting a record for that month.
Iron ore futures sank 1.5 per cent to $US92.65 a tonne.
