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Iron ore prices stabilised on Monday on a smaller-than-expected cut in demand for the key steelmaking ingredient in top consumer China, where its price has been weighed down in the last couple months over market expectations of a fourth quarter supply glut.
Benchmark December iron ore on the Singapore Exchange was up 0.31% at $91.05 a metric ton, as of 0840 GMT. It slipped by 6.1% and 2.6% in September and October, respectively.
The most-traded iron ore contract on China’s Dalian Commodity Exchange erased earlier gains to end daytime trade down 0.07% at 674.5 yuan ($101.46) a ton. It lost 3.4% and 4.3% in September and October, respectively.
Some Chinese steelmakers began equipment maintenance amid weak profitability, while several others in northern regions temporarily trimmed output to improve local air quality. That sparked expectations of a sharp fall in hot metal output, a gauge of iron ore demand.
But average daily hot metal output among surveyed Chinese steelmakers fell only 0.2% from the previous week to around 2.32 million tons as of October 29, data from consultancy Mysteel showed.
Iron ore still faces downside risks from weak fundamentals, but market sentiment has somewhat recovered with prices falling close to the technical support level, analysts at broker Guoxin Futures said in a note.
That helped ore prices stabilise, they added.
Coking coal and coke, other steelmaking inputs, slid 2.82% and 3.01%, respectively, aided by heightened anticipation of a faster supply recovery amid government calls to ensure energy security in the winter.
Steel benchmarks on the Shanghai Futures Exchange were mostly weaker. Rebar shed 1.05%, hot-rolled coil lost 0.72%, wire rod dipped 0.24% while stainless steel added 0.97%.
($1 = 6.6477 Chinese yuan)
(Reporting by Amy Lv and Lewis Jackson; Editing by Rashmi Aich, Ronojoy Mazumdar and Louise Heavens)
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