BEIJING (Reuters) - Singapore iron ore futures reversed course on Thursday, as a much weaker-than-expected demand for steel dented sentiment.
The benchmark April iron ore on the Singapore Exchange traded 0.72% lower at $119.4 a tonne as of 0704GMT.
The most-traded May iron ore futures contract on Dalian Commodity Exchange (DCE) ended daytime trading 2.01% lower at 854 yuan ($125.25)a tonne, extending losses for the fourth day in a row and the lowest since February 14.
“The data released today showed that the apparent demand of construction steel products posted a drastic fall, weighing on sentiment,” said Pei Hao, a Shanghai-based senior analyst at the international brokerage firm FIS.
The apparent demand of construction steel products including rebar and wire rod fell by 6.1% week-on-week to 4.53 million tonnes in the week as of March 23, Reuters calculated based on data from consultancy Mysteel.
“The impact of China’s reopening may be short lived amid ongoing underlying issues in China’s property market. This could lead to further weakness in the iron ore price this year,” analysts at ANZ bank said in a note.
Prices of other steelmaking raw materials such as coking coal and coke similarly weakened in the afternoon trading session with the former dipping 0.36% and the latter falling 0.99%.
The weakness in raw materials prices permeated into the steel market as well. Rebar on the Shanghai Futures Exchange declined by 2.02% to 4,070 yuan a tonne, hot-rolled coil fell 1.42%, wire rod moved down 1.43% and stainless steel lost 0.98%.
The broad weakness in the ferrous market in the afternoon trading session came after it recorded some gains in the morning session after the Federal Reserve hinted a shift towards a pause in rate hikes following the turmoil in financial sector triggered by the recent collapse of two U.S. banks.
Lifting market sentiment in the morning, the northern Chinese cities of Handan and Tangshan - two major steelmaking hubs - decided to remove the latest round of production curbs as air quality improved.
The latest emergency response in both hubs was implemented from March 17 and March 20, respectively. Local steel mills are typically required to curb production over the period.
($1 = 6.8181 Chinese yuan)
Reporting by Amy Lv and Dominique Patton in Beijing; Editing by Sherry Jacob-Phillips and Nivedita Bhattacharjee
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