Iron Ore Prices Retreat as China’s Hot Metal Output Falls | Mariner News
Iron ore futures have experienced a notable retreat, with prices declining on major exchanges. This downward trend is primarily attributed to a significant drop in hot metal output within China, the world’s leading consumer of the steelmaking ingredient. Following the New Year holiday, many Chinese steel mills have been slow to resume full production, impacting demand and leading to a dip in the commodity’s market value.
Understanding Recent Iron Ore Price Declines
On China’s Dalian Commodity Exchange (DCE), the most-traded May iron ore contract closed 1.03% lower at 813 yuan ($116.63) per metric ton. The benchmark February iron ore on the Singapore Exchange also declined 0.97% to $107 a ton. Data from the Shanghai Metals Market (SMM) revealed a 0.26% week-on-week fall in hot metal output, nearly 2 million tons, as steel production slowed due to delayed restarts and planned annual maintenance. This reflects cautious sentiment in global commodity markets.
China’s Steel Demand and Future Outlook
Sluggish portside cargo transactions further fueled price pressure. Traders and steel mills in China remained hesitant to accumulate large inventories beyond essential Lunar New Year restocking. Existing inventory buildup, combined with a cautious approach to new purchases, limited upside for iron ore prices. While December’s record steel exports offered brief support, current domestic demand weakness from reduced steelmaking activities is the dominant factor. Investors are now closely monitoring China’s economic indicators for signs of recovery in steel demand.
