Benchmark iron ore futures retreated Tuesday after hitting four-week highs in the previous session as weakening steel margins in top steelmaker China weighed on commodity prices.
That’s according to the website hellenicshippingnews.com, citing a Reuters article.
Iron Ore 1.4% lower
Iron ore on China’s Dalian Commodity Exchange ended the day’s trading 1.4% lower at 1,046 yuan ($161.26) a ton, while the front-month contract on the Singapore Exchange fell 2.2% to $166.50 a ton by 0702 GMT.
Steel margins have fallen rapidly in recent days
“Steel margins have fallen rapidly in recent days. This would motivate some high-cost steelmakers to carry out maintenance work and consequently reduce iron ore consumption,” said Richard Lu, a senior analyst at consulting firm CRU in Beijing.
Demand for iron ore ahead of CNY supports prices
However, demand for iron ore ahead of the Chinese New Year holiday is likely to support prices, as is heavy congestion at ports in China, which has slowed unloading activity, he said.
Those “near-term upside risks” helped support spot prices for iron ore in China, which hit $174.50 a ton on Monday, near last month’s nine-year high, according to consultancy SteelHome.
Rio Tinto iron ore shipments up 2.4 percent
Mining company Rio Tinto reported a 2.4% rise in iron ore shipments for the fourth quarter, boosted by industrial activity in China, where it said demand remains robust despite new local closures caused by COVID-19.
Coking coal supplies in China partly hampered by Corona
The sell-off in steelmaking inputs saw coking coal down 3.9% and coke down 4%, with restrictions in coronavirus-affected areas in China hampering supplies and adding to downward pressure.
“The recent spike in coronavirus cases in Asia is not helping risk sentiment, and commodities are feeling the chill at the moment,” he said. “But we see this as a short-term dislocation and expect commodity prices to continue to rise in 2021.”
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