Iron-ore posts biggest daily loss in nearly two months on China demand worries
Iron-ore prices slid on Thursday to record their biggest daily losses in nearly two months, weighed down by rising concerns about demand in top consumer China as steel margins shrink and steel consumption weakens amid high input costs.
The most-traded iron-ore contract on China's Dalian Commodity Exchange closed daytime trade down 1.85%, the largest daily loss since April 9, at 767.5 yuan ($113.32) a ton, the weakest level since April 16.
The benchmark July iron-ore on the Singapore Exchange tumbled 1.84% to $101.75 a ton, as of 08:00 GMT, the lowest since March 9 and recording the biggest daily loss since April 9.
Demand for iron-ore will likely dwindle as risks of steel production cuts rise with high coal prices squeezing margins, said analysts.
"Steel demand has somewhat begun to feel the bite of higher inflation caused by elevated energy prices," said Steven Yu, a senior analyst at consultancy Mysteel.
China's apparent consumption for five major steel products slipped by 3.1% week-on-week as of June 4 after a weekly fall of 0.5% previously, Mysteel data showed.
Steel benchmarks on the Shanghai Futures Exchange struggled. Rebar dipped 0.57%, hot-rolled coil fell 0.44%, wire rod shed 0.56% and stainless steel slipped 2.42%.
Prices of coking coal and coke, however, found continued support from reduced supply, rising 4.34% and 2.28%, respectively.
"A supply contraction is certain; apart from coal mine production suspension, attention should also be paid to the regulation of off-balance-sheet production, which could have a significant impact, providing upward momentum to prices," analysts at broker Galaxy Futures said in a note.
A fatal mine accident in coal-rich Shanxi province in late May that killed at least 82 people has triggered stringent safety inspections, leading to production suspension at many mines and underpinning coal prices.
