Dalian iron ore futures fell on Thursday, erasing earlier gains as a weak steel market and lingering woes over steel production cuts offset optimism about resilient demand after some mills in China’s top steel production hub Tangshan resumed production.

The most-traded January iron ore on China’s Dalian Commodity Exchange (DCE) DCIOcv1 ended daytime trading 0.49% lower at 714.5 yuan ($99.10) a metric ton.

“The imported margins (of iron ore cargoes) have been quite decent recently, luring traders to secure the imported cargoes, temporarily supporting the spot prices, with the strengthen filtered through into the domestic futures market today,” said Cheng Peng, a Beijing-based analyst at Sinosteel Futures.

But this is quite risky as more cargoes will be brought into the domestic market. Therefore, iron ore prices will likely tumble once demand shows clear signs of softening in the coming weeks, he warned.

The benchmark August iron ore SZZFU3 on the Singapore Exchange was down 0.68% at $100.75 a metric ton, as of 0732 GMT.

Iron ore consumption remain resilient in the near term, as hot metal output was still relatively high and some mills have resumed operations of blast furnaces since August, Huatai Futures analysts said in a note.

But its demand will face downside risk in the medium term, given that steelmakers tend to take a cautious attitude towards raw materials procurement amid looming steel production controls, they added.

Other steelmaking ingredients also fell, with coking coal DJMcv1 slipping 0.94% and coke DCJcv1 dropping 1.45%.

Steel benchmarks on the Shanghai Futures Exchange were broadly weighed down by continuous pick-up in inventories and lukewarm demand.

Renewed concerns over China’s weakening property market after big developer Country Garden failed to make $22 million in bond payments also weighed on sentiment.

Rebar SRBcv1 dipped 0.51%, hot-rolled coil SHHCcv1 lost 0.76%, and wire rod SWRcv1 ticked down 0.02%

Stainless steel SHSScv1 rose 0.23%.

Source: Reuters