Iron ore price faces mounting pressure as $100 support looks rocky

Iron ore slipped as Chinese steel mill profits come under pressure amid an uncertain outlook for demand.

Futures of the steelmaking staple fell as much as 1.4% to $103.20 in Singapore trading. Prices are on track for their second weekly drop as traders assess conditions in the world’s biggest market for steel.

“Iron ore’s $100-a-ton floor faces mounting pressure in 4Q as weak Chinese fixed-asset investment and poor steel-mill profitability underscore fragile fundamentals,” Bloomberg Intelligence said in a note, which cited a correction in Chinese steel prices for pushing mills back into the red.

Data from Chinese consultancy Mysteel showed an increase in iron ore inventories at mills and ports. The buildup comes after Chinese imports rose to a record last month, while the first ore from Guinea’s giant Simandou project is due to come online soon.

“The elevated inventories prompted steel mills in Mainland China to scale back purchases,” according to a note from BMI, a unit of Fitch Group.

Singapore iron ore futures fell 0.9% to $103.75 a ton at 12:31 p.m. local time. Yuan-priced futures on the Dalian exchange and Shanghai steel contracts also declined.

Meanwhile, base metals trimmed this week’s gains on the London Metal Exchange, with aluminum falling 0.2% from Thursday’s highest close in more than three years. Copper also dropped 0.2%.

(By Katharine Gemmell)