By Enrico Dela Cruz
July 7 (Reuters) – Dalian and Singapore iron ore futures dipped on Friday, moving in a tight range this week, as traders assessed demand prospects while pondering how broad the anticipated economic stimulus measures in China would be.
The most-traded September iron ore on China’s Dalian Commodity Exchange DCIOcv1 ended daytime trade 1.9% lower at 812.50 yuan ($112.16) per metric ton.
On the Singapore Exchange, the steelmaking ingredient’s benchmark August contract SZZFQ3 was down 1.8% at $108.10 per metric ton, as of 0710 GMT, after trading virtually flat early in the session.
Markets expect China, the world’s top steel producer and metals consumer, to unveil a stimulus package to support its sputtering post-pandemic economic rebound after a meeting of the Communist Party’s political bureau later this month.
Analysts say they were waiting to see how far Beijing was willing to go to support the struggling domestic property sector.
“Chinese authorities are unlikely to deliver a ‘big bang’ stimulus targeting infrastructure and property as many seem to think,” said Justin Smirk, senior economist at Westpac.
“We expect to see a multi–faceted but passive approach focusing on incentivising home buyers and investors; bringing forward and supporting infrastructure investment; with some modest incentives to spur household consumption.”
Rising iron ore supply from top exporters Australia and Brazil is also curbing prices, analysts said.
“We remain cautious on the iron ore price as we expect demand to be broadly flat through this year while supply is set to lift,” Smirk said in Westpac’s monthly outlook, projecting the price to be around $100 a ton by end-2023.
Other steelmaking inputs also retreated, with coking coal DJMcv1 and coke DCJcv1 down 1.3% and 1.8%, respectively.
Steel benchmarks on the Shanghai Futures Exchange widened losses. Rebar SRBcv1 slumped 2.2%, hot-rolled coil SHHCcv1 shed 2.4%, wire rod SWRcv1 fell 2.1%, and stainless steel SHSScv1 dipped 0.4%.
(Reporting by Enrico Dela Cruz in Manila; Editing by Nivedita Bhattacharjee and Rashmi Aich)
((enrico.delacruz@thomsonreuters.com))
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