Iron ore futures prices declined on Friday for a second straight session, weighed down by signs of softer demand and shrinking steel margins in top consumer China.

The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) TIO1! closed daytime trade 0.32% lower at 785.5 yuan ($110.43) a metric ton.

The benchmark December iron ore (SZZFZ5) on the Singapore Exchange was down 0.1% at $103.85 a ton, as of 0657 GMT.

Average daily hot metal output, a gauge of iron ore demand, fell by 0.3% from the previous week to 2.36 million tons as of November 20, data from consultancy Mysteel showed.

Meanwhile, steel margins continued to narrow, with only just above one-third of steel mills operating at a profit, versus nearly a half a month before, according to Mysteel data.

However, both benchmarks were set for a second weekly gain, both up by 1% so far this week.

Seaborne iron ore prices (SH-CCN-IRNOR62) have stayed well above the key psychological level of $100 so far in November, defying earlier expectations of an average price at $90-95 in the fourth quarter.

Protracted negotiations between China’s state iron ore buyer and miner BHP BHP have tightened availability of some iron ore, underpinning prices despite weakening demand for the key steelmaking ingredient, Reuters reported on Wednesday.

Also, Reuters exclusively reported that the state-run iron ore buyer has ordered steel mills and traders to stop purchasing a certain type of BHP iron ore, adding to a separate ban already in place and escalating a dispute over a new contract.

Coking coal NYMEX:ACT1! and coke (DCJcv1), other steelmaking ingredients, slid 1.82% and 1.31%, respectively.

Steel benchmarks on the Shanghai Futures Exchange were mixed. Rebar RBF1! nudged up 0.07%, hot-rolled coil EHR1! was flat, wire rod (SWRcv1) advanced 0.36% and stainless steel HRC1! shed 0.16%.
Source: Reuters