Iron ore’s rounding off a woeful week on another soft note as persistent concern about demand in China fuses with expectations of rising supply and falling steel futures to hurt prices. A risk-off mood among investors as North Korean tensions simmered compounded the damage.
The benchmark spot price has tumbled 12 percent this week, the worst performance since May 2016. In China, futures on the Dalian Commodity Exchange have slumped into a bear market and capped a fourth week of declines, the longest in five months, while Singapore’s SGX AsiaClear contracts are chalking up a weekly loss of almost 10 percent.
Iron ore is in retreat as investors fret about the impact on steel production in China of environmental checks even before winter curbs kick in, which may further hurt demand. This year, steel output has been running at a record pace in the top supplier, aiding iron ore.
Adding further headwinds were fresh threats from North Korea and sanctions from the U.S. that spurred a flight to safety on Friday, as well as a rating cut for China by S&P Global Ratings.
“The environmental curbs are having a serious impact on demand,” Fan Lu, an analyst at Sinosteel Futures Co., said in a note on Friday. “After the recent price declines, mills are even more reluctant to build up huge inventories going into the holiday season.
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