Market Outlook: Iron Ore Declines Amid Surging Supply and Disappointing Chinese Stimulus

Forex - Iron ore contracts declined for the third session due to disappointment over rising raw material stocks used in steel production and the lack of further monetary stimulus from China.

The May iron ore contract at the Dalian Commodity Exchange (DCE) traded at 746.5 yuan/ton ($101.85), down 1.84% at 06:10 GMT.

The benchmark February iron ore on the Singapore Exchange was down 0.61%, trading at $96/ton.

An analyst stated, “Iron ore markets were shaken by the increase in shipments arriving in Chinese waters compared to the previous week, which could already increase stocks at ports."

Chinese consulting firm Mysteel indicated that the prolonged supply surplus in the country's iron ore market will keep China's imported iron ore prices under downward pressure this year.

The People's Bank of China announced on Friday that it will strengthen monetary policy adjustments and will lower banks' reserve requirement ratios and interest rates "at an appropriate time."

Concerns that U.S. President-elect Donald Trump might impose higher tariffs on Chinese imports while trying to revitalize the Beijing economy led to a decline in the yuan and volatility in Chinese stock markets.

Chinese officials have implemented various support measures since September to boost investor confidence.

In the DCE, coking coal and coke posted declines of 1.69% and 1.91%, respectively.

At the Shanghai Futures Exchange, rebar and hot-rolled coil fell by 0.9%, while wire rod declined 0.14%, and stainless steel increased by 0.3%.