Iron ore futures in Singapore dip again amid China concern
singapore — Iron ore futures in Singapore dipped back below $50 a metric tonne, amid a resurgent dollar and indications that China’s economy has yet to rebound, offering early vindication to forecasters, including Goldman Sachs Group, who’d argued that recent gains were unlikely to persist.
The SGX AsiaClear contract for May settlement sank as much as 5.8 per cent to $49.90 a tonne in Singapore, and was at $51.49 at 11:13 am local time; while on China’s Dalian Commodity Exchange, futures fell as much as 5.1 per cent. Losses in the contracts in Asia typically presage a drop in the Metal Bulletin price for 62 per cent content spot ore in Qingdao, which is updated daily.
Iron ore has been on a wild ride in March as investors sought to gauge conflicting economic signals from China against still-elevated port stockpiles and shifts in the US currency. Prices posted the biggest ever one-day gain on March 7 in a rally to the highest since June, prompting banks including Goldman to say the gains would be temporary. Miner BHP Billiton said after the spike that it was probably
There hasn’t been much improvement in China’s economy and steel mills aren’t keen to purchase iron ore,
Zhao Chaoyue, Analyst at China Merchants Futures Co
more bearish about iron ore than the price of any other commodity in its portfolio.
“There hasn’t been much improvement in China’s economy and steel mills aren’t keen to purchase iron ore, especially after the price surge,” said Zhao Chaoyue, an analyst at China Merchants Futures Co in Shenzhen. “The dollar also surged overnight, spurring a selloff in commodities.”
The Metal Bulletin price for 62 per cent content spot ore in Qingdao fell 0.8 per cent to $57.87 a dry tonne on Wednesday, dropping for a second day. After declining in January, the commodity rebounded 19 per cent last month and then surged 19 per cent on March 7 to peak at $63.74. So far this quarter it’s up 33 per cent after posting three years of losses on a global glut, driven by rising low-cost supply and sinking steel demand in Chi- na. The earliest private indicators for March show that China’s monetary and fiscal stimulus have yet to spur a rebound. A purchasing manager’s index focused on small businesses, a gauge of corporate confidence and a new reading of the economy derived from satellite imagery all remain at levels signaling deterioration, though the pace of declines moderated. Against that, China’s home prices climbed in more cities last month.
Premier Li Keqiang said in a keynote speech at the Boao forum on Thursday that China’s economy saw positive signs of change this year, and the government was confident of maintaining growth above 6.5 per cent over the next five years. China will promote steady development of the property market, avoiding major fluctuations, he said.
“My sense is that there’s more confidence and more optimism” in China’s economy than a year ago, Fortescue Metals Group’s chief executive officer, Nev Power, said in a Bloomberg Television interview at same forum. In iron ore, “we are going to continue to see volatility though, because it is so heavily traded in the futures market that we will continue to see that driven by any positive or negative newsflow.”