Iron ore extends drop towards $US90/t as Citi cuts outlook
Futures fell for a fourth day in Singapore, sinking below $US93 a tonne. The rainy season in southern China, as well as high temperatures in the north, have persisted, slowing construction, Shanghai Metals Market said in a note.
On Monday, figures from China — the top iron ore importer — showed nationwide steel output in May was below April's total on a daily basis, and almost 7 per cent less than a year ago. It was the weakest showing for the month since 2018.
The steel-making staple has been under pressure in recent weeks as traders eye a slower pace of construction into the summer, as well as a push by authorities in China to curb steel output to combat a glut. Futures are coming off the back of a four-week losing run that was the longest since January.
'Steel demand in China is likely to remain weak over the coming months over the upcoming seasonal lull,' Citigroup said in a note, cutting iron ore forecasts. China's property market weakness is showing no signs of a turnaround, and manufacturing faces increased trade headwinds, they said.
The bank's prompt-to-three month price forecast was reduced to $US90/t from $US100, while the six-to-12 month target was scaled back to $US85 from $US90.
On the supply side, miners in Brazil — the largest shipper after Australia — have been ramping up flows. Exports totalled 35.077 million tons in May, narrowly setting a record for that month.
Iron ore futures fell as much as 1.2 per cent to $US92.90/t in Singapore, before trading at $US93 at 11.44am. Steel futures in China also declined.
Copper and other industrial metals were lower as investors monitored the Israel-Iran conflict and appetite for risk assets. US President Donald Trump called for the evacuation of Tehran, in comments that contrasted with earlier optimism the situation wouldn't escalate into a wider conflict.
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