Dalian and
Singapore iron ore futures slipped on Thursday as traders continued to worry
about weak profits at Chinese steel mills, with fresh COVID-19 alerts in
Shanghai and Beijing adding to concerns.
The
benchmark September iron ore contract on China’s Dalian Commodity Exchange
DCIOcv1 ended daytime trading 0.3% lower at 924.50 yuan ($138.33) a tonne,
extending losses to a third day.
On the
Singapore Exchange, the steelmaking ingredient’s most-active July contract
SZZFN2 dropped 0.8% to $143.65 a tonne by 0706 GMT.
Dalian iron
ore has rebounded 19% from this year’s low of 779.50 yuan a tonne hit on May
10, while the spot price for the benchmark 62%-grade material in China jumped
to $147.50 a tonne on Wednesday, the highest in nearly seven weeks, based on
SteelHome consultancy data.
“The
short-term iron ore demand has increased more than expected, but the profits of
downstream steel mills are weak,” Sinosteel Futures analysts said in a note,
citing elevated prices of iron ore that have squeezed steel margins.
Iron ore
prices now appear to have limited upside potential, they said, with top steel
producer’s China’s resolve to further reduce output this year to curb emissions
also tempering optimism about demand.
Sentiment
also remained largely guarded after parts of Shanghai began imposing new COVID
lockdown restrictions on Thursday.
Entertainment
venues and internet cafes in Beijing’s largest district of Chaoyang, home to
more than 3 million people, were ordered to be shut on Thursday after an
outbreak involving bars was detected.
Offering
some relief, data on Thursday showed China’s exports grew at a double-digit
pace in May, shattering expectations in an encouraging sign for the world’s
second biggest economy that has been hit hard by COVID curbs.
Construction
steel rebar on the Shanghai Futures Exchange SRBcv1 rose 0.7%, while hot-rolled
coil SHHCcv1 gained 0.6%. Stainless steel SHSScv1 slipped 0.3%.
Dalian
coking coal DJMcv1 fell 1.4% and coke DCJcv1 shed 2%.
Source: Reuters (Reporting by Enrico Dela Cruz in Manila; Editing by Shailesh
Kuber)