Iron ore futures continued to decline on Tuesday, influenced by the outcomes of China's key Politburo meeting and a strong global supply outlook. The September iron ore contract on China's Dalian Commodity Exchange (DCE) dropped by 2.77% to 756 yuan (USD 104.14) per metric ton during daytime trading. Similarly, the benchmark August iron ore on the Singapore Exchange fell by 3.08% to USD 98.75 per ton, marking its lowest point since April 8.
The Politburo, China's top decision-making body, announced plans to enhance policy support for the economy, with a focus on increasing consumption to stimulate domestic demand. The statement emphasized that China is currently facing challenges due to external economic pressures, weak domestic demand, and a challenging transition from traditional growth drivers to newer ones. This meeting, chaired by President Xi Jinping, highlighted the ongoing struggles in China's economy, particularly in the manufacturing sector, which is expected to contract for a third consecutive month in July. The persistent property crisis and job insecurity are also weighing on growth, leading to expectations of additional government stimulus.
Iron ore prices were further pressured by rising port inventories, indicating continued weakness in demand from steel mills, according to sector experts. Latest data showed that total iron ore stockpiles across Chinese ports increased by 1.47% week-on-week to 151.8 million tons as of July 26. Additionally, iron ore shipments from 19 ports and 16 mining companies in Australia and Brazil rose to 24.9 million tons from July 22-28, a 4.4% increase from the previous week.
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