(Bloomberg) – Iron ore futures fell for the fifth session to the lowest price this year, as restrictions on China’s steel production weighed on demand and investor expectations for industrial and economic data this week.
Singapore futures reversed gains from Tuesday’s early session and are more than $100 below the record set in May due to lower demand. Power rationing restricts operations at mills, and China has anticipated the deadline for cuts in steel production.
Estimates of the Bloomberg Intelligence indicate that production between August and December will fall 10% compared to the previous year to fulfill the government’s promise to reduce the volume produced this year.
“Some steelmakers are holding back purchases to wait for lower iron ore prices,” said Yi Zhu, an analyst at BI, adding that port inventories could rise for the rest of the year. Stocks are currently about 10% above 2020 levels, according to SteelHome data.
Investors are also awaiting data on Wednesday that could show an even stronger slowdown in China’s economy in August and lower steel production.
Investment in the construction sector may have cooled amid government measures to curb rising property prices and the crisis in the country’s largest developer.
In Singapore, iron ore futures were down 1.3% to $120.50 a ton at 3:27 pm, after dropping 4.9% on Monday. In China, iron ore advanced while steel futures retreated.
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