The iron ore price fell heavily for a second consecutive session on Friday, suffering its largest percentage decline since late March.
According to Metal Bulletin, the spot price for benchmark 62% fines slid by 1.85%, or $1.10, to $58.28 a tonne, trimming its year to date gain to 33.8%.
Despite weakness seen on Thursday and Friday, for the week the price still rallied by an impressive 7.9%.
Iron ore futures on the Dalian Commodities Exchange also fell by 0.97% to 410 yuan overnight on Friday, suggesting the weakness in the benchmark spot price may extend to a third session should the declines be maintained or built upon today.
Despite recent weakness in the spot price, demand for iron ore has been strong in recent months, as demonstrated by a strong bounce in Chinese steel production.
“China National Bureau of Statistics has announced that China’s crude steel output rose on a yearly basis in March, reversing the downtrend seen in the past few months, as rising steel prices prompted mills to ramp up production,” said analysts at Metal Bulletin.
“The country produced 70.65 million tonnes of crude steel last month, up almost 3% year-on-year. Daily crude steel output averaged 2.28 million tonnes per day in March, up nearly 13% compared with an average of 2.02 million tonnes per day during January-February, according to Steel First calculations.”
Although production ramped up in March, for the quarter Metal Bulletin calculate that China’s crude steel output fell 3.2% to 192.01 million tonnes compared to the same period a year earlier.
Chinese steel demand typically gains in March following the week long Lunar New Year holiday in February.
Recent strength in Chinese steel prices, along with some firms bringing forward production before a government-imposed production curtailment starting later this month, has also contributed to the strength in the iron ore price.