Iron ore futures experienced a decline on Friday, positioning themselves for a weekly loss amid growing apprehensions about demand prospects in China, the leading consumer of the metal. The May iron ore contract on China’s Dalian Commodity Exchange (DCE) closed the daytime session down 0.33% at 757.5 yuan ($104.52) per metric ton, marking a significant weekly drop of 3.8%. Earlier in the trading session, it recorded its lowest point since January 10 at 753.5 yuan per ton.
Meanwhile, the benchmark April iron ore on the Singapore Exchange also saw a decrease of 0.85%, trading at $99.65 per ton as of 0714 GMT, after touching a low of $99.05 earlier, representing a 4.2% decline for the week. Concerns about demand have been fueled by China’s consideration of establishing funds to create a compensation system aimed at eliminating outdated steel capacity. CITIC Pacific Special Steel’s chairman, Qian Gang, made comments that analysts interpreted as a sign of Beijing’s serious commitment to address over-capacity issues in the steel sector, which could negatively impact the demand for steelmaking feedstocks.
Additionally, during its annual parliament meeting earlier this month, China announced plans to restructure its steel industry through output cuts, though specifics were not provided. Despite these challenges, a slight uptick in near-term demand helped mitigate losses on Friday. A survey from consultancy Mysteel indicated that the average daily hot metal output, a key indicator of iron ore demand, increased by 2.5% week-over-week, reaching the highest level since August 2, 2024, at 2.36 million tons as of March 20.
Other steelmaking ingredients on the DCE also fell, with coking coal and coke dropping by 1.8% and 1.76%, respectively. Additionally, steel benchmarks on the Shanghai Futures Exchange remained relatively stable, with slight variations in rebar, hot-rolled coil, wire rod, and stainless steel prices.