Iron ore hits lowest level in over a year amid weak demand in China (Image: Reuters)
Futures contracts iron ore closed lower on Monday (23), reaching their lowest level in more than a year.
Commodity prices remain under pressure from the prospect of weak demand from China, amid an uneven economic recovery and increased supply.
The most-traded January iron ore contract on China's Dalian Commodity Exchange (DCE) ended trading down 4.5% at 658.5 yuan a tonne – the lowest level since Aug. 17, 2023.
“The broader risk tone is being supported by a weak outlook for Chinese demand, as evidenced by weakness in new housing construction and lack of compensation from the infrastructure sector,” Westpac analysts said in a note.
Iron ore performance in the year
Iron ore output in the January-August period rose 4.1 percent from a year earlier, according to Chinese financial information website Hexun Futures, citing data from the National Bureau of Statistics.
Meanwhile, stainless steel exports hit a record high in August, rising 33.4 percent from a year earlier, Chinese consultancy Mysteel reported.
The increase in exports, which also grew 18.9 percent from July, comes as Chinese mills increasingly turn to the global market amid weak domestic demand this year, Mysteel said.
China's central bank provided 14 days' worth of cash to its banking system at a lower interest rate, signaling its intention for more monetary stimulus, although analysts said the financing operation itself was not a major policy easing.
The world's second-largest economy is experiencing slower growth despite a raft of policies aimed at stimulating consumption.
Speculation that Beijing will accelerate monetary easing grew last week after a massive rate cut by the Federal Reserve.