Market Outlook: Iron Ore Heads for Second Weekly Decline Amid Falling Chinese Demand

Futures iron ore contracts fell in today's trading. The contracts are preparing for their second consecutive weekly decline due to a contraction in demand in China, although pre-holiday inventory replenishment and increased bets on further stimulus have limited the losses.

On the Dalian Commodity Exchange (DCE), May iron ore dropped by 1.79% to 766 yuan/ton (104.95 USD) at 05:38 GMT.

The benchmark January iron ore on the Singapore Exchange fell by 1.17% to 99.6 USD/ton.

Both benchmarks declined by 1% this week after dropping more than 3% the previous week. Renewed hopes for increased stimulus from China helped the market rise earlier this week.

Analysts noted that adjustments in production schedules at steel mills continue due to ongoing maintenance in furnaces, hence a persistent decline in hot metal production would not be surprising.

Chinese New Year begins on January 28, and domestic steel producers typically stock up ahead of this date to meet production needs during and after the holiday.

Coking coal and coke on the DCE fell by 1.26% and 2.15%, respectively.

On the Shanghai Futures Exchange, rebar fell by 0.88%, hot-rolled coil by 0.61%, wire rod by 0.56%, and stainless steel by 0.23%.

According to the National Bureau of Statistics, the profit of steel producers dropped by 83.7% to 7.86 billion yuan in the first 11 months of the year.