Iron ore futures traded in China fell as much as 7% on Tuesday, reaching their lowest level in nearly two months, fueled by concerns about higher interest rates and still stagnant demand in the Chinese market.
The Federal Reserve approved a 0.5 percentage point interest rate hike last week and said it could hold the hike for the next two or three meetings and then assess how the economy and inflation are responding before deciding whether more increases are needed.
“This has led to a significant decline in the prices of US dollar-denominated commodities such as iron ore,” analysts at GF Futures wrote in a note.
Meanwhile, tight profit margins by steelmakers and general controls on steel production have reduced production increases and dampened demand for ingredients for steelmaking, according to the note.
The most active iron ore futures on China’s Dalian Commodity Exchange for September delivery fell as much as 7% on the session to 756 yuan ($112.71) a tonne, the lowest since Dec. March.
Contracts ended down 4.1% at 779 yuan a tonne, recording losses for the third straight day.
On the Singapore exchange, the most traded iron ore contract for June fell 3.1% to $123.45 a tonne.
Dalian coking coal futures fell 2.1% to RMB 2,610 per tonne, and coke prices fell 1.9% to RMB 3,343 per tonne.
China’s central bank said on Monday it would increase support in the face of a slowing economy, while keeping a close eye on domestic inflation and monitoring policy adjustments in developed economies.
Source: CNN Brasil
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