Chinese iron ore futures extended losses on March 24 to slump to their lowest in three weeks, as worries about demand prospects fuelled by the coronavirus pandemic eclipsed rising chances of supply reductions.
The most-traded May iron ore contract on the Dalian Commodity Exchange fell 3.1% to 619 yuan/t ($87.43/t) in morning trade, marking its lowest since March 2. Futures prices on the Singapore Exchange, however, rebounded 3.7%.
Spot prices for the steelmaking raw material dropped to six-week lows on March 23 amid the heavy sell-off in futures markets, with the benchmark 62% grade settling at $84.50 a tonne, the lowest since February 10.
China's iron ore and steel futures on March 24 defied a recovery of industrial metals and equities, which rebounded following the scaling up of monetary and fiscal policy support for economies hammered by the pandemic.
"Investors are reassessing the effectiveness of the stimulus plans," commodity strategists at ANZ said in a note.
However, they said Brazilian miner Vale SA's move to suspend operations at its distribution facility in Malaysia "could potentially take some downward pressure off iron ore prices".
Vale, one of China's major iron ore suppliers, said on Monday it would halt operations at its Teluk Rubiah distribution terminal in Malaysia, which is expected to reduce sales in the first quarter by roughly 500,000 tonnes of iron ore.
The operations were scheduled to be suspended from March 24 through March 31 to ensure safety of Vale's workers amid the pandemic, but the miner said the move would not affect full-year 2020 production and sales.
(Writing by Emma Yang Editing by Tammy Yang)
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