Market Overview: Dalian Iron Ore Drops to Two-Week Low Amid Disappointment from Beijing Stimulus

Forexl - Iron ore futures in Dalian fell to their lowest level in over two weeks, influenced by China's recent stimulus package and softer economic data, as increasing supply in the largest consumer puts pressure on prices. The January iron ore contract on the Dalian Commodity Exchange (DCE) concluded the morning session at 761.0 yuan/ton ($105.95), down 3%. The contract dropped to as low as 756.0 yuan/ton in early trading, marking its weakest level since October 25, down by 3.5%.

The benchmark December iron ore on the Singapore Exchange decreased by 1.67% to $100.85/ton at 06:41 UTC. As China faces renewed pressure following Donald Trump's potential re-election as U.S. President, local governments announced a 10 trillion yuan ($1.40 trillion) debt package on Friday to alleviate financing issues and stabilize slowing economic growth.

The package disappointed investors hoping for additional fiscal buffers to prevent new tensions and trade barriers between China and the U.S. Analysts believe that the debt swap will not directly translate into growth. Data released on Saturday indicated that consumer prices in China rose at the slowest pace in four months in October, while deflation in producer prices deepened. Analysts noted that China’s iron ore imports stayed above 100 million tons last week, continuing to surprise the market.

Coking coal and coke prices on the DCE fell by 3.32% and 4.56%, respectively. Steel indicators on the Shanghai Futures Exchange also declined, with rebar down 2.3%, hot-rolled coil and stainless steel falling by 1.94%, and wire rod decreasing by 3%.