Iron ore futures in China were little changed on Friday, but were headed for their biggest weekly drop since December as the rally in steel prices lost steam and stockpiles of iron ore at Chinese ports rose to the most in at least 13 years.
Iron ore futures in China were little changed on Friday, but were headed for their biggest weekly drop since December as the rally in steel prices lost steam and stockpiles of iron ore at Chinese ports rose to the most in at least 13 years. Iron ore prices have rallied with steel this year despite a sustained increase in stocks of imported ore at China’s ports. But as steel prices pulled back, concerns emerged in the market over the growing mountain of the steelmaking raw material that could increase further. The most-traded iron ore on the Dalian Commodity Exchange was flat at 654.50 yuan ($95) a tonne by midday. The contract, which touched a record high of 741.50 yuan last month, has lost 3.5 percent this week, the most since the week ending Dec. 23. The most-active rebar on the Shanghai Futures Exchange was up 0.2 percent at 3,396 yuan per tonne. The construction steel has dropped 7 percent since scaling a three-year high on Feb. 27.
Stockpiles of iron ore at major Chinese ports reached 130.05 million tonnes as of March 3, SteelHome said, the most since 2004 when the consultancy began tracking the data.
The continued inventory buildup shows Chinese “demand is failing to consume the surplus volumes,” UK steel consultancy MEPS said in a note.
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“With reduced export opportunities, as a result of trade actions in various countries, China now looks to its own domestic market and its investment in infrastructure to consume the oversupply,” it said.
China’s steel exports fell to a three-year low of 5.75 million tonnes in February.
As iron ore futures slid this week, so did spot prices with deals slow in physical markets, traders said.
Iron ore for delivery to China’s Qingdao port <.IO62-CNO=MB> fell 0.5 percent to $86.79 a tonne on Thursday, the lowest since Feb. 10, according to Metal Bulletin.
The spot benchmark was down 5 percent so far this week, on course for its biggest such loss since mid-November.
($1 = 6.9083 Chinese yuan) (Reporting by Manolo Serapio Jr.)