Iron ore futures dip amid slower economic growth

Dalian iron ore futures fell on Friday, as weaker-than-expected economic data and reduced steel production dampened market sentiment.

China’s economy grew by 4.6pct YoY in Q3, according to official data, but this was slower than the previous quarter’s growth. Although Beijing has introduced several policy measures since last month, analysts suggest more stimulus is needed to fully revive the economy.

Meanwhile, according to the National Bureau of Statistics, China’s crude steel output in September declined for the fourth consecutive month, falling 1.1pct from August and 6.1pct from the previous year. However, the rate of decline eased compared to August.

The latest production data from mills affiliated with the China Iron and Steel Association (CISA) showed that the during October 1-10, daily crude steel output at CISA member mills increased by 1.7pct from late September, averaging 2.05 mln tons per day, though it remained 1.6pct lower YoY.

Iron ore futures are also under pressure from rising port inventories and increased output from major producers. On the Dalian Commodity Exchange, the most-traded iron ore contract fell 1.29pct to 760.5 yuan (USD 106.7) per ton, down more than 3pct on a weekly basis.

Other steelmaking raw materials followed suit, with coke and coking coal futures dropping 3.66pct and 3.88pct, respectively, to 1,988 yuan (USD 279) and 1,351 yuan (USD 190) per ton. All raw material futures showed gains compared to the previous morning session.

On the Shanghai Futures Exchange, rebar futures declined 1.85pct to 3,336 yuan (USD 468) per ton, while HRC futures slipped 0.8pct to 3,511 yuan (USD 493) per ton. Wire rod futures dipped slightly by 0.05pct to 3,692 yuan (USD 518) per ton, and stainless steel futures dropped 1.29pct to 13,775 yuan (USD 1,934) per ton. All steel futures, except for stainless steel, posted gains compared to the previous morning session.

1 USD / 7.12 yuan