By Enrico Dela Cruz
(Reuters) – Benchmark iron ore futures on the Dalian and Singapore exchanges fell on Monday, pressured by improving short-term supply and signs of continued economic weakness in China, the biggest steelmaker.
The drop came despite an unexpected monetary easing by the Chinese central bank. The move also weighed on other steel inputs in Dalian and steel futures in Shanghai.
The most-traded iron ore contract for May on China’s Dalian Commodities Exchange ended day trading down 2.4% at 705 yuan ($111.12) a tonne, close to a session low of 700 yuan. , the lowest since January 10.
On the Singapore Stock Exchange, the most active iron ore contract for February was down 1.7% to $124.55 a tonne at 07:25 GMT (04:25 GMT).
China’s central bank cut medium-term borrowing costs for the first time since April 2020, suggesting a sharpening of the economic slowdown, even as the world’s second-largest economy posted faster-than-expected 4% annual growth. , in the last quarter of 2021.
“The lagged economic data and PBOC rate cut has already been priced in, in our view,” said Atilla Widnell, managing director of Navigate Commodities in Singapore.
Iron ore is likely to correct after recent highs, Widnell said, adding that improved weather in Brazil and increased shipments from Australia could ease “overinflated” prices.
Spot iron ore for delivery in China fell 2.5% on Monday to $127.50 a tonne, data from consultancy SteelHome showed.
(Reporting by Enrico Dela Cruz in Manila)
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