Iron ore price hits seven-week low on softening China steel demand, higher supply bets

The benchmark July iron ore on the Singapore Exchange fell 1.21% to $106.35 a ton, as of 0714 GMT, the lowest since April 11.

“Focus has shifted back to weak fundamentals from stimulus-driven expectations of demand picking up; supply will likely maintain high in June while there is limited upside room for demand,” said Cheng Peng, a Beijing-based analyst at Sinosteel Futures.

The consumption of steelmaking ingredients shrank along with falling hot metal output, while portside stocks continued to pile up, putting ore prices under downward pressure, analysts at Huatai Futures said in a note.

“But some steel mills may return to stockpile cargoes to meet production needs over the upcoming Dragon Boat Festival following persistent price falls, which may limit price loss,” Sinosteel’s Cheng added.

The Chinese futures market will be closed on June 10 for the holiday.

Other steelmaking ingredients on the DCE retreated further, with coking coal and coke down 0.96% and 0.97%, respectively.

Steel benchmarks on the Shanghai Futures Exchange lost ground. Rebar fell 0.68%, hot-rolled coil (HRC) dipped 0.34%, wire rod edged down 0.41% and stainless steel shed 1.63%.

The apparent consumption of medium plate, HRC and construction steel products shrank more steeply this week, data from information provider Zhaogang showed.

“The data is worse than we had expected, so prices will fall further,” a Singapore-based trader said.

The suspension of construction activities for the upcoming National College Entrance Examination in many Chinese cities also curbed steel demand, analysts said.

($1 = 7.2455 Chinese yuan)

(By Amy Lv and Mei Mei Chu; Editing by Eileen Soreng)