Dalian iron ore was set for a seventh straight quarterly gain on Wednesday, although a slump in Chinese steel mills’ profit margins weighed on prices in the final trading sessions of June.
The most-traded iron ore contract for September delivery on China’s Dalian Commodity Exchange ended daytime trading 0.7% lower at 1,165 yuan ($180.50) a tonne, down 14.2% from a record high scaled on May 12.
Dalian iron ore, however, was set to close out the quarter with a gain of about 20%, helped by its record-setting rally in May.
Robust raw material demand in China, the world’s top steel producer, had propelled iron ore prices to record highs in a rally also spurred by what Chinese authorities had described as excessive market speculation.
Costly raw materials combined with softening demand for steel products in China are now weighing on steel producers’ profitability, analysts said.
“Steel prices have dropped sharply from May record highs,” said Robert Rennie, head of financial market strategy at Westpac.
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