Iron ore futures prices declined on Wednesday as weak economic data from China dampened investor sentiment. The benchmark February iron ore on the Singapore Exchange dropped 2.6% to $125.95 per metric ton as of 0728 GMT. Similarly, the most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) concluded daytime trade 0.75% lower at 926 yuan ($128.67) per ton.
Official data revealed that China’s economy grew by 5.2% in the fourth quarter compared to the same period a year earlier, missing analysts’ expectations of 5.3% in a Reuters poll. Additionally, data showed that China’s new home prices in December experienced the sharpest decline since February 2015, marking the sixth consecutive month of decreases. The real estate sector continues to face challenges due to weak confidence.
Analyst Cheng Peng from Sinosteel Futures in Beijing commented, “It’s hard to see a marginal improvement in the fundamentals of ore as steel prices are weak and mills are still suffering losses.” However, some analysts anticipate support from pre-holiday replenishment by mills. Citi analysts noted that steel mills in China need to further accumulate stocks in the next two to three weeks for holiday preparations. Chinese steelmakers typically stockpile feedstocks from the spot market to meet production needs during the week-long Lunar New Year holiday break when logistics are disrupted.
Other steelmaking ingredients on the DCE displayed mixed movements, with coking coal down 0.22%, while coke edged up 0.48%. On the Shanghai Futures Exchange, most steel benchmarks experienced declines, with rebar falling 0.65%, hot-rolled coil dipping 0.5%, wire rod shedding 0.12%, and stainless steel gaining 1.41%. China’s crude steel output in 2023 remained flat compared to the previous year, according to official data, stabilizing after two consecutive years of decline but defying expectations of a rise for the first time in three years.
