Iron ore futures fell sharply on Monday on concerns over China’s recovery. Data released on Monday showed China churned out a record of 92.27 million tonnes of steel. According to SteelHome data, iron ore port inventories fell to 107.75 million tonnes last week, the lowest since October 2016.
While the decline in port inventories illustrated Chinese steel mills’ strong demand for iron ore as they ramped up production, the latest weekly data showed that the destocking of steel products has slowed. “In the short term, the output may remain high, and small growth may still occur, but the probability of a substantial increase in production is weak when demand is weak,” Sinosteel Futures Co Ltd analysts wrote in a note.
Chinese steel demand could take a further hit as construction activities in southern part of China have been slowed by heavy rainfall and floods. The reliance on the industry amid sluggish consumer demand underlines the fragility of the overall recovery.
Meanwhile, investors are becoming increasing concerned of a resurgence of the Coronavirus outbreak following a recent outbreak of new cases in Beijing.
Singapore iron ore futures fell by over $2 in Asia. The downward pressure continued through to London morning. Jul was seen trading 100.55 before quickly descended below $100 as the selloff continued before rebounding to mid-100. Jun was seen trading in tight ranges in London between 103.0 and 102.8. (FIS)