MARKET OVERVIEW - Iron Ore Retreats Amid Risk Aversion Sentiment but Prepares for Weekly Gains

Iron ore futures have declined due to the risk-off sentiment in financial markets caused by the Ukraine-Russia tensions, but are still on track for weekly gains due to strong demand.

On the Dalian Commodity Exchange (DCE), January iron ore traded at 768.50 yuan/ton ($106.06) at midday, down 1.2%. The contract has so far registered a 2.9% increase on a weekly basis.

The benchmark December iron ore on the Singapore Exchange was trading at $100.70/ton, down 1.3% at 08:07 GMT. It has shown a 5.5% increase weekly to date.

One trader noted, "China's daily hot metal production remains steady and at a high level. This indicates that iron ore consumption will remain strong even during the off-peak winter season."

Analysts suggest that the recent counter-cyclical increase in China's steel production could be a sign of preloading production and exports ahead of potential U.S. tariffs next year.

However, the escalating conflict in the Ukraine-Russia war has caused a flight to safety in financial markets, putting pressure on prices.

In DCE, coking coal decreased by 0.5% to 1,285 yuan/ton, and coking coal fell by 1.8% to 1,901.50 yuan/ton.

Steel indicators on the Shanghai Futures Exchange (SHFE) also fell. Rebar traded down 1.4% at 3,279 yuan/ton, hot-rolled coil down 1.2% at 3,452 yuan/ton, wire rod down 1.1% at 3,578 yuan/ton, and stainless steel down 1.1% at 13,195 yuan/ton.