Iron ore futures prices softened on Monday, weighed down by declining steel production in China, rising port inventories, and concerns over weakening downstream demand.

The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) fell 1.82% to 782.5 yuan($109.86) a metric ton.

The benchmark December iron ore on the Singapore Exchange was 1.59% lower at $104.45 a ton, as of 0700 GMT.

Production at Chinese blast furnace steel producers declined for the fifth straight week from October 24-30, with the average capacity utilisation rate falling by 1.3 percentage points to 88.6%, according to consultancy Mysteel.

Daily hot metal output, a gauge of iron ore demand, dropped 1.5% week-on-week to 2.36 million tons, Mysteel data showed.

Overseas supply is expected to recover further in November, with shipments and arrivals likely to increase, said Chinese broker Everbright Futures.

While domestic manufacturing steel demand may recover somewhat in the fourth quarter, the core issue in the current market is likely the impact of rapidly weakening end-user demand on iron ore fundamentals, analysts from broker Galaxy Futures said in a note.

Elsewhere, China’s state-backed steel association announced that steel output would slip below 1 billion tons in 2025 as part of the government’s pledge to reduce overcapacity.

Total iron ore stockpiles across ports in China climbed 1.53% week-on-week to about 135.6 million tons, as of October 31, according to SteelHome data.

Other steelmaking ingredients on the DCE lost ground, with coking coal NYMEX:ACT1! and coke (DCJcv1) down 0.85% and 1.17%, respectively.

Steel benchmarks on the Shanghai Futures Exchange all declined. Rebar RBF1! eased 0.96%, hot-rolled coil EHR1! dipped 0.6%, and stainless steel HRC1! lost 0.36%, while wirerod (SWRcv1) closed flat.
Source: Reuters