Iron ore futures dip more than 8% on lackluster demand outlook
BEIJING, September 1 (Reuters) – Chinese iron ore futures plunged more than 8% on Wednesday, driven by weakness in the spot market as restrictions on steel production across the country shattered prospects for restoring demand .
“The September delivery (of iron ore) remains a large contango,” SinoSteel Futures analysts wrote in a report, noting that the price of the Super Special Fine deliverable was recently lowered to 723 yuan ($ 111.88 ) per ton.
The September iron ore contract traded for around 880 yuan per ton during the morning session.
Although China has yet to ease steel production restrictions, steel mills are not supported to increase inventories in the short term and this could affect price gains in long-term contracts, SinoSteel Futures added. .
Benchmark of iron ore futures on the Dalian Commodity Exchange DCIOcv1, for delivery in January, was down 8.1% to 763 yuan ($ 118.07) per ton, at 2:55 a.m. GMT, the largest percentage loss since July 30.
Singapore’s most traded iron ore contract in September SZZFU1 also fell, down 6.1% to $ 143 a tonne.
Steel prices on the Shanghai Futures Exchange were also undermined by lower commodities and lukewarm economic data.
Used rebar SRBcv1 fell 2.2% to 5,215 yuan per ton and hot-rolled coils SHHCcv1 fell 2.7% to 5,470 yuan per ton.
Shanghai Stock Exchange Stainless Steel Futures SHSScv1 fell 3.3% to 17,700 yuan per ton.
dalian coking coal DJMcv1 dipped 0.3% to 2,454 yuan per ton.
Coca term DCJcv1 slipped 0.8% to 3,127 yuan per tonne.
“Constrained by environmental disruptions and a shortage of raw materials, the supply of coke will continue to be constrained,” GF Futures said in a note.
Chinese factory activity contracted in August for the first time in nearly a year and a half, as COVID-19 containment measures, supply bottlenecks and high material prices raw materials weighed on production, dealing a heavy blow to the economy.
($ 1 = 6.4620 Chinese yuan)
(Report by Min Zhang and Dominique Patton, edited by Sherry Jacob-Phillips)
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