Iron ore futures dropped to their lowest level in over a year on Monday, as investors reacted to soft demand prospects from China and stronger supply dynamics amid ongoing monetary easing measures from the world’s largest consumer.
The January iron ore contract on China’s Dalian Commodity Exchange (DCE) finished the trading day 4.5% lower at 658.5 yuan per metric ton, marking its weakest point since August 17, 2023. Meanwhile, the benchmark October iron ore price on the Singapore Exchange fell 2.31% to $81.55 per ton as of 0701 GMT.
Analysts from Westpac noted that the overall risk-off sentiment is driven by a bleak outlook for Chinese demand, highlighted by declining new housing construction and insufficient support from the infrastructure sector.
According to Chinese financial information site Hexun Futures, raw iron ore production from January to August increased by 4.1% year-on-year. In contrast, stainless steel exports reached a record high in August, surging 33.4% year-on-year and 18.9% from July, as manufacturers increasingly rely on the global market due to weak domestic demand.
China’s central bank has provided 14-day cash injections into the banking system at lower interest rates, signaling potential further monetary stimulus. However, analysts cautioned that this funding operation alone does not represent a significant policy easing.
Despite a series of measures aimed at boosting domestic spending, the world’s second-largest economy continues to struggle with growth. Speculation about accelerated easing measures grew last week following a significant rate cut by the U.S. Federal Reserve.
Other steelmaking materials on the DCE also experienced declines, with coking coal and coke prices down 4.02% and 4.35%, respectively. Additionally, steel benchmarks on the Shanghai Futures Exchange fell, with rebar decreasing by 3.35%, hot-rolled coil dropping nearly 2.5%, wire rod declining 1.65%, and stainless steel losing 2.24%.
4o mini
