Iron ore price falls

Iron ore prices fell for a third straight session on Monday to hit their lowest level in a week as some investors unwinded long positions to lock in profits amid weakening demand and steel margins.

Top-traded iron ore for May delivery on China's Dalian Commodity Exchange (DCE) ended the day down 1.1% at 992.5 yuan ($138.65) per metric ton, its lowest level since Jan. 2.

Benchmark February iron ore on the Singapore Exchange fell 0.71% to $137.6 a tonne as of 0707 GMT, also at its lowest level since Jan 2.

“Pig iron production is expected to remain relatively low, with many mills still incurring losses, which will weigh on iron ore demand,” analysts at Soochow Futures said in a note.

However, losses were limited by the expectation that factories will return to the spot market to restock raw materials to meet production needs during the week-long Lunar New Year holiday, analysts said.

Iron ore prices will remain volatile as the market continues to react to any policy changes from Beijing, and further price recovery will depend on economic stimulus from China, analysts at ING Bank wrote.

“The downside risk in 2024 is that the stimulus effect will be weaker than expected,” they said.

Other steel ingredients at DCE also posted losses, with coking coal and coke falling 4.54% and 2.62%, respectively.

“Steel industry fundamentals are weak as, despite a slight contraction in supply, seasonally weak demand and higher production costs have depressed steel margins,” said Kevin Bai, a Beijing-based analyst at consultancy CRU Group.

“We expect weak supply and demand in the steel market is likely to last until the Lunar New Year holiday.”