Iron ore nears three-week low as shrinking steel margins, slow demand weigh
BEIJING, April 2 (Reuters) - Iron ore futures prices slid on Thursday to their lowest in nearly three weeks, pressured by shrinking steel margins and faltering demand following the completion of pre-holiday restocking in top consumer China.
The most-traded iron ore contract on China's Dalian Commodity Exchange (DCE) DCIOcv1 slipped 1.29% to 805 yuan ($116.94) a metric ton by 0202 GMT, after touching its lowest since March 12 at 793.5 yuan earlier in the session.
The benchmark May iron ore SZZFK6 on the Singapore Exchange was 0.8% lower at $105.45 a ton, as of 0152 GMT. It hit its lowest since March 16 at $104.50 earlier.
The risk premium that had been priced in for fears of a prolonged war in the Middle East has receded as signs of a potential de-escalation in the conflict have emerged, triggering a downward price correction, said Xinli Chu, an analyst with broker China Futures.
U.S. President Donald Trump said in a televised speech that the U.S. military had nearly completed the goals it had set out to accomplish in its war with Iran and that the conflict would soon be ending.
"Falling energy prices undermined cost support for ore; moreover, steel margins have been squeezed by rising raw material costs, making mills less willing to accept high ore prices," said Chu.
Meanwhile, some domestic steselmakers have already completed feedstock restocking for the Qingming festival over April 4-6, with the resultant drawdown in spot liquidity pressuring prices, Chu said.
Additionally, the need for capital rebalancing at the start of the month might spur some selloff on the ore side, said a Singapore-based trader on condition of anonymity as he is not authorised to speak to media.
Coking coal DJMcv1 and coke DCJcv1, other steelmaking ingredients, declined 0.7% and 0.38%, respectively.
Steel benchmarks on the Shanghai Futures Exchange extended losses. Rebar SRBcv1 dropped 0.86%, hot-rolled coil SHHCcv1 dipped 0.64%, and wire rod SWRcv1 and stainless steel SHSScv1 both shed 0.74%.
($1 = 6.8837 Chinese yuan)
