The most-traded May iron ore on China’s Dalian Commodity Exchange ended morning trade 0.3% lower at 806.50 yuan ($115.55) a tonne.
Dalian iron ore climbed to 823 yuan a tonne on Friday, its strongest since June 15, as top steelmaker China’s easing of Covid-19 restrictions lifted hopes of a revival in demand. On the Singapore Exchange, the steelmaking ingredient’s benchmark January contract was down 1.8% at $109.55 a tonne, as of 0448 GMT.
“Iron ore futures rallying to close at $111.75/t on Friday is yet another poignant example of just how much heat and overly positive sentiment is currently built in to the current pricing structure,” said Navigate Commodities Managing Director Atilla Widnell.
Iron ore at above $100 a tonne seems “overvalued” currently, he said, but “the longer prices persist above this level there’s an increasing likelihood the pricing-floor may start to move higher”.
With miners undertaking seasonal maintenance programmes in the first quarter of 2023, he said supply is likely to drop. That may support iron ore prices, along with an improved outlook for Chinese demand. Steel benchmarks on the Shanghai Futures Exchange rose, with rebar up 0.7%, hot-rolled coil climbing 0.9%, wire rod gaining 0.3%, and stainless steel advancing 0.5%.
