The Dalian iron ore price hit a one-year low on Wednesday as demand worries intensified due to China’s curbs on its steel output and a worsening liquidity crisis in the country’s property sector.
The most-traded January iron ore contract on the Dalian Commodity Exchange ended daytime trading 4.6% lower at 536.50 yuan ($83.85) a tonne, after touching 518.50 yuan earlier in the session, its weakest since November 9, 2020.
On the Singapore Exchange, the most-traded December contract was down 4% at $87.20 a tonne, as of 0721 GMT, after initially falling as much as 6.9%.
“(China’s steel) production restrictions have suppressed expectations for winter (iron ore) storage and replenishment,” analysts at Zhongzhou Futures wrote in a note.
“The scope of limited production during the heating season has expanded, (while) blast furnace maintenance has increased.”
Loose supply and weak demand suggest portside iron ore inventory in China, which swelled to a 31-month high of 145.10 million tonnes last week, according to SteelHome consultancy data, and will continue to accumulate, it said.
A deepening liquidity crisis in the Chinese property sector, which accounts for about a quarter of domestic steel demand, added to the bearish mood ahead of a deadline for cash-strapped China Evergrande Group to make an offshore bond coupon payment on Wednesday.
