In commodity news, dry bulk market 11/12/2021
Iron ore futures fell on Friday as China's largest steel producer's steel raw materials increased in port inventories, coupled with weak demand, indicating that prices may weaken further in 2022.
The daily trading price of iron ore for May delivery on China's Dalian Commodity Exchange DCIOcv1 fell 0.7% to 639.50 yuan (100.46 US dollars) per ton.
However, the benchmark contract is expected to rise for the third consecutive week. Earlier this week, it was supported by optimism about China's economic growth stimulus measures and policy support for its debt-laden real estate developers.
As of 0737 GMT, the most active January iron ore contract on the Singapore Exchange SZZFF2 fell 0.5% to US$108.55 per ton.
"The increase in iron ore port inventories in recent weeks is a bearish signal. It is expected that inventories will continue to rise in the next 2-3 months, because pig iron production may not rebound until the (Beijing) Winter Olympics," Westpac Senior Economics Justin Smilk said in a report.
According to data from the Steel House Consulting Company, the stock of imported iron ore at Chinese ports reached 155.4 million tons last week, the highest level since July 2018.
Although the decline in China's steel inventories may indicate an improvement in downstream demand, Smirk said that the current level is still at a five-year high, indicating that "there is a long way to go before it shows that the market is tight."
He said that by the end of 2022, iron ore prices may reach US$75 per ton, because China may continue to implement strict steel production controls to curb emissions.
According to SteelHome data, China's spot iron ore transaction price on Thursday was US$109 per ton, up 4.3% from last week, but 53% lower than the record high set in May.
Construction rebar SRBcv1 on the Shanghai Futures Exchange fell 0.3%, while hot rolled coil SHHCcv1 fell 1%. Stainless steel SHSScv1 fell 0.5%. Source: Reuters (Reporting by Enrico Dela Cruz in Manila; Editing by Sherry Jacob-Phillips)