China's iron ore futures extend pullback amid supply speculation

Release time：Jul 09, 2019 From：admin

Iron ore futures in China fell for a second straight session on Wednesday, dropping nearly 5 percent, as the market awaited clarity on the magnitude of supply disruption following Vale SA’s dam closures.

Steel prices also fell as worries over weak demand in top consumer China persist.

The most traded iron ore on the Dalian Commodity Exchange slid as much as 4.7 percent to 615 yuan ($90.93) a tonne. The steel-making raw material hit a record high 657.5 yuan on Tuesday but ended lower after an eight-day rally.

“I think this is just a natural volatility after such a big supply shock,” said Daniel Hynes, senior commodity strategist at ANZ. “At the moment no one is really sure how things will progress (in Brazil) in the immediate term.”

Brazilian miner Vale, the world’s largest iron ore producer, has declared force majeure on some iron ore contracts after a court-ordered halt to a mine responsible for nearly 9 percent of its output following a dam burst that likely killed more than 300 people.

Other steel-making ingredients were also lower, with coking coal down 0.7 percent at 1,276 yuan a tonne by 0216 GMT, while coke slipped 2.2 percent to 2,055.5 yuan.

The most-active rebar contract on the Shanghai Futures Exchange fell as much as 2.2 percent to 3,711 yuan. Hot rolled coil dropped almost 2 percent to 3,613 yuan.

“That probably has something to do with the economic outlook in China. We’ll wait and see how the data this week pans out. I do suspect the market is getting a little nervous,” Hynes said.

China’s trade engine likely remained stuck in reverse in January, with imports and exports expected to fall for the second month in a row, adding to concerns the economy may be at risk of a sharper slowdown.