Iron ore futures slipped on Monday on rising port inventory of the steelmaking ingredient in China, though optimism over prospects of strong domestic steel demand for the rest of the year kept losses in check.
The Dalian Commodity Exchange’s most-traded September iron ore contract closed down 0.3% at 817 yuan ($116.91) a tonne, stretching losses into a third consecutive session.
Iron ore’s August contract on the Singapore Exchange dropped 0.7% to $106.31 a tonne in afternoon trade, extending losses into a fourth session.
China’s imported iron ore inventory stocked at ports rose for a fourth straight week to 112 million tonnes, as of July 17, the highest since mid-May, data from SteelHome consultancy showed.
Rising port stockpiles and signs that iron ore demand from steel mills were levelling off also kept iron ore’s spot prices under pressure.
Benchmark 62% fines stood at $111 a tonne on Friday, SteelHome data showed, retreating from a near one-year high hit on July 15.
Dalian iron ore, however, remains on track for a fifth monthly gain in a row, supported by strong steel prices and China’s stimulus program to prop up its economy.
“We believe the gains in futures prices are boosted by positive sentiment towards steel demand in H2 2020, as well as the liquidity injections into the overall market,” said Zhilu Wang, an analyst at Wood Mackenzie.
“But fundamentally iron ore prices will trend weaker due to weaker blast furnace operations in summertime, recovery of seaborne iron ore supply from Brazil and ongoing strong shipments from Australia.”
Construction steel rebar on the Shanghai Futures Exchange was down 0.3% while hot-rolled coil dropped 0.1% and stainless steel slipped 0.2%.
Coking coal lost 0.1%, but coke outperformed with a gain of 1.3%.
($1 = 6.9885 yuan)
(Reporting by Enrico dela Cruz; Editing by Subhranshu Sahu and Rashmi Aich)