Iron ore drops as Chinese steel demand remains weak
Steel-making feedstock prices fell 1.9% in early trading on Monday before rebounding slightly as demand in China remains on the verge of disappearing and Port Hedland iron ore shipments quickly resumed after the shutdown due to cyclone.
The Chinese steel market has been inactive since early April, despite the start of the country's usual peak construction season. Inventories jumped 6.2% in early April, with lower sales forcing mills to offer restocking discounts and prevent restocking.
Liquid iron inventories remain high, reflecting slower destocking and weaker demand on the market, Galaxy Futures notes. Long-term fundamentals are expected to gradually weaken and prices to correct downward, he added.
Iron ore fell 0.5% to $115.95/t in Singapore. Futures in Dalian were up 1%, while steel contracts in Shanghai were up at least 0.7%.