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Iron ore prices continue to fall as US-China trade tensions and rising steel stocks weigh

Iron ore prices continue to fall as US-China trade tensions and rising steel stocks weigh

Iron ore futures declined on Wednesday for the second consecutive session. This was due to concerns about demand, resulting from an escalating Sino-U.S. Trade spat as well as rising steel inventories in China, which is the top consumer.

Donald Trump, the U.S. president, said that Washington is considering ending some trade relations with China.

The U.S., and China began Tuesday charging each other additional port fees for ocean shipping companies. This is another sign that tensions are rising between the two world's largest economies. These tensions have impacted the market sentiment and pushed down commodity prices.

The daytime trading price of the most traded January iron ore contract at China's Dalian Commodity Exchange closed 1.46% lower, at 776.5 Yuan ($108.97), per metric tonne. On Tuesday, the contract reached a low of more than a month.

As of 8:10 GMT, the benchmark November iron ore traded on Singapore Exchange fell 0.45% to $104.7 per ton.

Accumulated steel stocks could also affect the price of this key ingredient, as they can reduce margins, and make mills less interested in acquiring more feedstock.

Analyst Zhuo Guqiu at Jinrui Futures said that the latest data revealed steel inventories continue to accumulate, causing concern over ore supply outlook.

The hot metal production may continue to fall due to the increasing losses in some mills.

Analysts at Everbright Futures say that ore demand is expected to remain strong in the short term and support prices.

The data released by the China Iron and Steel Association, a state-sponsored organization, showed that the daily crude steel production among members steelmakers increased by 7.5% compared to the same 10-day period in September.

Coking coal, coke and other steelmaking materials have risen by 1.01% apiece and 0.34% respectively.

The benchmarks for steel on the Shanghai Futures Exchange are mixed. Rebar dropped 0.85%, while stainless steel fell 0.24%. Hot-rolled coils lost 0.86%, and wire rod gained 0.45%.

(source: Reuters)