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A sector that was once racing to build new supply has been closing mines and deferring projects as low prices bite into the cost curve.
Iron ore futures in China eased on Wednesday, but were trading higher on a weekly basis, as market participants balanced weak demand and hopes for better future consumption.
The most-traded May iron ore on China’s Dalian Commodity Exchange (DCE) closed 2.5% lower at 749 yuan ($103.52) per metric ton. However, the contract was up 2.5% on a weekly basis.
Chinese markets will be closed on Thursday and Friday for a public holiday.
China’s property crisis has dragged down demand for steel products, which are heavily used in building construction.
The country could issue a larger amount of bonds in the second quarter compared with the first three months of this year, potentially helping with demand, Jinrui Futures said in a note.
“The recent decline in raw material prices has been greater than that of finished products, so profits per ton of steel have recovered. There is a possibility of steel mills resuming production, and expectations for raw material replenishment have increased,” it said.
In this holiday-truncated week, buying was compressed into the first three days, boosting demand for ferrous metals and raw materials, a trader said.
The benchmark May iron ore on the Singapore Exchange dropped 1.9% to $99.65 a metric ton as of 0710 GMT.
Other steel-making ingredients on the DCE were mixed, with coking coal advancing 0.8% to 1,471.50 yuan a ton, and coke down 0.6% to 1,960.50 yuan.
Steel benchmarks on the Shanghai Futures Exchange were down.
Rebar fell 1.2% to 3,422 yuan a ton, hot-rolled coil was down 0.8% at 3,659 yuan, wire rod decreased 0.5% to 3,728 yuan, while stainless steel gained 0.2% to 13,465 yuan.
($1 = 7.2354 yuan)
(By Mai Nguyen; Editing by Mrigank Dhaniwala and Shounak Dasgupta)
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