On the Singapore Exchange, the most-traded December contract was down 4% at $87.20 a tonne, as of 0721 GMT, after initially falling as much as 6.9%.
“(China’s steel) production restrictions have suppressed expectations for winter (iron ore) storage and replenishment,” analysts at Zhongzhou Futures Co Ltd wrote in a note.
“The scope of limited production during the heating season has expanded, (while) blast furnace maintenance has increased.”
Loose supply and weak demand suggest portside iron ore inventory in China, which swelled to a 31-month high of 145.10 million tonnes last week according to SteelHome consultancy data, will continue to accumulate, they said.
A deepening liquidity crisis in the Chinese property sector, which accounts for about a quarter of domestic steel demand, added to the bearish mood ahead of a deadline for cash-strapped China Evergrande Group to make an offshore bond coupon payment on Wednesday.
“Increasing risks of weaker demand from the Chinese property sector saw iron ore futures push lower,” said Daniel Hynes, senior commodity strategist at ANZ.
Long-term outlook
Fitch Solutions decided to revise down its iron ore price forecast from $170/tonne in 2021 and $130/tonne in 2022 to $155/tonne and $110/tonne, respectively.
In the longer term, Fitch forecasts prices to decline to $65/tonne by 2025 and $52/tonne by 2030.
“We maintain our view that iron ore prices will consistently trend downwards, as cooling Chinese steel production growth and higher output from global producers will continue to loosen the market,”
(With files from Reuters)
