Market Outlook: Iron Ore Retreats Amid Rising Supply and Weakened Steel Sentiment

Forex - Iron ore futures prices declined as strong supply persisted due to a weak steel market outlook, despite new incentives for China's real estate sector limiting losses. The January iron ore contract on the Dalian Commodity Exchange (DCE) closed the morning session down 1.44% at 755.5 yuan/ton (104.32 USD). The benchmark December iron ore on the Singapore Exchange traded at 99.35 USD/ton, down 1.21% at 06:45 GMT. Analysts noted that iron ore prices have fallen as supply continues to increase. They indicated that shipments from Australia's leading Port Hedland terminal reached 45.6 million tons in October, bringing this year's total to the highest level in four years, and added that the Australian government expects exports to rise by 1.9% to 908 million tons in 2024. The increasing stocks of steel production materials at major Chinese ports contradict the weak performance of imported iron ore prices and demand seen since the beginning of this year. China announced tax incentives for property and land transactions yesterday in an effort to support the real estate market, which has been hit hard by a crisis, by boosting demand and alleviating developers' financial difficulties. Despite the sector's declining share due to the ongoing crisis since 2021, the real estate market continues to be China's largest steel consumer. On the DCE, coking coal and coke fell by 1.51% and 1.85%, respectively, reducing gains from the previous session. Steel indicators on the Shanghai Futures Exchange lost value, with rebar and hot-rolled coil down 0.95%, wire rod down 0.36%, and stainless steel falling 0.86%.