Iron ore stabilises on slower-than-expected China demand fall

Iron ore prices settled on Monday as demand for the critical steelmaking component in China, the world's largest consumer, fell less than anticipated. The price of December benchmark iron ore on the Singapore Exchange rose 0.31% to $91.05 a metric ton, as of 0840 GMT. However, it dropped by 6.1% in September and 2.6% in October. On China's Dalian Commodity Exchange, the most-traded iron ore contract ended the trading day down 0.07% at 674.5 yuan ($101.46) a ton, slipping 3.4% in September and 4.3% in October.

Some Chinese steelmakers initiated equipment maintenance due to low profitability, while several others in northern regions temporarily reduced output to improve air quality, leading to expectations of a significant fall in hot metal output, an indicator of iron ore demand. Yet, the average daily hot metal output among surveyed Chinese steelmakers only declined by 0.2% from the previous week to approximately 2.32 million tons as of October 29, according to data from consultancy Mysteel.

Despite the downward pressure on iron ore prices, market sentiment has somewhat improved as prices approached a technical support level, according to analysts at broker Guoxin Futures. This factor contributed to the stabilization of ore prices. Additionally, coking coal and coke, other essential steelmaking inputs, declined by 2.82% and 3.01%, respectively, due to heightened expectations of a faster supply recovery.

This expectation was fueled by government calls to ensure energy security during the winter. Steel benchmarks on the Shanghai Futures Exchange also experienced a decline, with rebar falling by 1.05%, hot-rolled coil shedding 0.72%, wire rod decreasing by 0.24%, while stainless steel gained 0.97%.