Iron ore futures set for first weekly loss in 4 on China demand fears

The steelmaking ingredient's most-active January contract on China's Dalian Commodity Exchange slipped 0.5% to 727 yuan ($112.95) a tonne by 0330 GMT, and has fallen nearly 3% from last week.

But the most-traded November contract on the Singapore Exchange rose 0.5% to $124.20 a tonne, after Rio Tinto Group lowered its 2021 shipment forecast.

Still, the bearish outlook for steel demand in China and an intensified decarbonisation efforts in the world's top steel producer through output restrictions weighed heavily on sentiment.

Spot iron ore in China traded at $121 a tonne on Thursday, down 5% from last week, and off nearly 50% from a record peak in mid-May, SteelHome consultancy data > showed.

"We expect ore prices to continue to drift lower for the next two years," said Justin Smirk, senior economist at Westpac, as he predicted that China's steel output will stabilise rather than surge to levels seen in recent years.

China's crude steel production shrank in July and August amid output curbs, while its steel demand is now forecast to shrink 1% this year instead of grow by 3%, according to the World Steel Association.

The collapse in iron ore prices is in stark contrast to the record-setting advance of two other steelmaking inputs driven by supply worries.