Market Outlook: Iron Ore Drops to Lowest Level in a Month as Metal Production Slows in China

The iron ore futures contracts on Forex carried their decline into the second session due to a slowdown in hot metal production in China; however, strong economic data from the largest consumer limited the decline. The May iron ore contract at the Dalian Commodity Exchange (DCE) finished morning trading down 1.37% at 758.0 yuan/ton ($103.43). The benchmark February iron ore on the Singapore Exchange dropped 1.19% to $97.65 per ton at 06:50 GMT. Chinese consultancy firm Mysteel stated, "With only four weeks until the Chinese New Year holiday, pre-holiday stocking of iron ore will provide some support to raw material prices this month." However, it was noted that ore prices would face downward pressure due to the seasonal decrease in hot metal production at factories slowing ore replenishment. China's service activities showed the fastest growth in the past seven months in December, driven by an increase in domestic demand; however, orders from abroad declined, reflecting rising commercial risks to the economy. At DCE, coking coal and coke fell by 0.22% and 1.71%, respectively. At the Shanghai Futures Exchange, rebar dropped by 0.6%, hot-rolled coil by 0.9%, and wire rod by 0.03%, while stainless steel gained 0.1%.