Dalian iron ore set to experience worst week since March as Chinese flags slow
By Enrico Dela Cruz
May 21 (Reuters) – Asia’s iron ore benchmarks fell for a third straight session on Friday, on track for a second consecutive weekly decline, as leading steel producer China stepped up efforts to curb a recovery dizzying commodity prices, linked to demand.
Most-traded iron ore for September delivery to the Dalian Commodity Exchange of China DCIOcv1 ended the day trading 3.4% down to 1,096.50 yuan ($ 170.48) per ton. It has fallen 5.4% so far this week, the biggest drop since mid-March.
Singapore Stock Exchange’s Most Liquid June Iron Ore SZZFM1 fell 4.8% to $ 191.30 a tonne at 7:29 a.m. GMT.
Steel prices in China have retreated from record levels last week, pushing down iron ore and other steelmaking ingredients, as the sell-off intensified after the Chinese cabinet said on Wednesday that it would limit “unreasonable” price gains to protect consumers.
Analysts say, however, that unless China takes measures to limit the consumption of industrial products, which could hamper its strong recovery from a crisis due to a pandemic, the price impact of the measures so far will be temporary.
“Have these (Chinese government agencies) made any fundamental or structural changes in the industry other than creating unnecessary speculation and market volatility?” Asked Atilla Widnell, Managing Director of Singapore-based Navigate Commodities.
“The answer is no. Allowing the invisible hand to go about its business would have been the right strategy.”
Despite the selling pressure on iron ore, prices, especially for high-quality materials, remain high, with the spot price at nearly $ 250 per tonne, creating problems for steel producers.
Prices are expected to remain high in the long run, as China’s stricter environmental regulations have prompted a switch to premium, less polluting materials, said Kohji Takei, director of the raw materials division at Nippon Steel, the most great steelmaker of Japan.
Structural steel rebar at the Shanghai Stock Exchange SRBcv1 slipped 0.7%, while the hot rolled coil SHHCcv1 was flat. Stainless steel SHSScv1 rose 0.7%.
Dalian Coking Charcoal DJMcv1 fell 5.7%, while coke DCJcv1 lose 4.3%.
Cumulative performance of Chinese ferrous materials https://tmsnrt.rs/2SeEeNG
(Reporting by Enrico Dela Cruz; Additional reporting by Yuka Obayashi in Tokyo; Editing by Subhranshu Sahu and Barbara Lewis)
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