Iron ore futures were range-bound on Tuesday, as investors balanced the ongoing weakness in China’s struggling property market with the sustained demand for the key steelmaking ingredient, supported by stronger steel margins.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trade 0.58% lower at 777 yuan ($107.45) a metric ton.
The benchmark April iron ore (SZZFJ5) on the Singapore Exchange was little changed at $102.1 a ton, as of 0700 GMT.
“The latest new construction data still showed a dramatic fall, ruling out the possibility of a quick recovery in steel demand from the sector any time soon, weighing on prices of steel and its feedstocks,” said Pei Hao, a senior analyst at the international brokerage Freight Investor Services (FIS).
Sunac China 1918, once among China’s largest real estate developers, said on Monday it expects to report a wider loss for the year ended December 2024.
“But we do not expect to see a drastic price fall in the near term as consumption needs will be underpinned by improved steel margins,” Pei said.
Steel margins have recently improved due to lower prices of raw materials, analysts at Maike Futures said in a note.
Around 53.25% of steelmakers were operating at a profit, as of March 13, compared with 50.22% in late February, a survey from consultancy Mysteel showed.
Analysts expect crude steel production to rise in March, as mills increase output driven by strong margins and growing downstream demand.
About 28% of mills surveyed plan to increase production next month, up from 25% in the previous month, Florence Sun, commodities strategist at Macquarie Group, said in a note.
Other steelmaking ingredients on the DCE retreated, with coking coal NYMEX:ACT1! and coke (DCJcv1) down 1.83% and 1.02%, respectively.
Steel benchmarks on the Shanghai Futures Exchange eased. Rebar shed 1.33%, hot-rolled coil dipped 0.88%, wire rod (SWRcv1) lost 0.76% and stainless steel fell 1.28%.
Source: Reuters
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