Iron ore futures drifted lower on Friday as high prices and slim margins deterred buying in the biggest consumer China, with the Dalian iron ore contract reporting a weekly decline for the first time in two weeks.

The most-traded May iron ore contract on China’s Dalian Commodity Exchange ended daytime trade 0.49% lower at 812 yuan ($116.55) a metric ton.

The benchmark February iron ore contract (SZZFG6) on the Singapore Exchange was 0.57% lower at $106.3 a ton as of 0800 GMT.
The Singapore contract has so far fallen 1.8% on the week, while the Dalian contract was down 0.3% week-on-week.

INCREASING STOCKS ACROSS CHINA’S MAJOR PORTS
Total stocks of imported iron ore across China’s major ports increased for the eighth straight week to a record high of 165.6 million tons, Mysteel data released on January 15 showed.

However, steel mill stocks fell 2.1% week-on-week and transaction volumes of portside iron ore dropped 20.3% week-on-week, as high prices and slim margins made steel mills hesitant to buy more ore.

Two of the world’s biggest miners, Rio Tinto and BHP, have partnered to extract up to 200 million metric tons of iron ore from two adjoining sites in Western Australia’s Pilbara region.

Iron ore shipments to China already reached record highs in December, with shipments expected to grow in 2026.

As domestic steel demand dwindles, iron ore prices are expected to move lower in the medium term, Chinese broker Galaxy Futures said.

However, investors’ appetite for risk is likely to grow as China’s central bank said it will cut interest rates on various structural monetary policy tools, and will lower interest rates on one-year re-lending facilities. The bank also said there was room to cut rates this year.

As other steelmaking ingredients on the DCE weakened, coking coal and coke (DCJcv1) fell 1.47% and 1.52%, respectively.

Steel benchmarks on the Shanghai Futures Exchange mostly firmed. Rebar edged 0.06% higher, hot-rolled coil gained 0.33% and wire rod (SWRcv1) grew 0.69%. Meanwhile, stainless steel shed 0.38%.
Source: Reuters