Steel Pressured by Regulatory Concerns

Iron ore futures slid to around CNY 750 per ton, with the key steelmaking raw material touching a five-month low after China’s Ministry of Commerce said it would place certain steel products under an export licensing regime starting January 1.

The move came as strong Chinese steel exports triggered growing protectionist pushback in overseas markets.

China’s steel sector has increasingly relied on exports in recent months due to weak domestic demand linked to a prolonged property market downturn.

Market sentiment was further dampened by disappointing November economic data, as retail sales growth and industrial production missed expectations, fixed asset investment fell more than forecast, and new home prices declined for a 29th consecutive month.

Looking ahead, iron ore prices may find some support as Chinese steel mills are expected to begin restocking feedstocks ahead of the Lunar New Year holiday in February to maintain production levels.

Iron ore futures slid to around CNY 750 per ton, with the key steelmaking raw material touching a five-month low after China’s Ministry of Commerce said it would place certain steel products under an export licensing regime starting January 1.

The move came as strong Chinese steel exports triggered growing protectionist pushback in overseas markets.

China’s steel sector has increasingly relied on exports in recent months due to weak domestic demand linked to a prolonged property market downturn.

Market sentiment was further dampened by disappointing November economic data, as retail sales growth and industrial production missed expectations, fixed asset investment fell more than forecast, and new home prices declined for a 29th consecutive month.

Looking ahead, iron ore prices may find some support as Chinese steel mills are expected to begin restocking feedstocks ahead of the Lunar New Year holiday in February to maintain production levels.

Malaysian palm oil futures were little changed on Monday, hovering near MYR 4,020 per tonne, following a sharp drop in the prior session as bargain hunting emerged after prices slid to a two-week low.

Traders continued to assess confirmation from the U.S. Department of Agriculture regarding private export sales of 132,000 metric tons of U.S. soybeans to China for delivery in the 2025/26 marketing year, a factor that could influence competing vegetable oil markets.

Investors also digested weak activity data from China, a key buyer, where November industrial output and retail sales growth fell short of forecasts amid persistent domestic and external headwinds.

Meanwhile, data released last week by the Malaysian Palm Oil Board showed November crude palm oil production fell 5.3% mom to 1.94 million tonnes.

However, end-November stocks jumped 13% to 2.84 million tonnes, the highest in 6-1/2 years, on robust full-year output that is on track to top 20 million tonnes for the first time ever.

Copper futures hovered around $5.3 per pound on Monday after sliding nearly 3% in the previous session, pressured by disappointing economic data from China, the world’s largest consumer of the metal.

November retail sales growth and industrial production fell short of expectations amid subdued domestic demand, while fixed asset investment declined more than forecast. New home prices also contracted for the 29th consecutive month, deepening concerns over the property sector.

Sentiment was further weighed by news that bondholders rejected China Vanke’s proposal to defer a bond payment due today by one year, raising fears of a potential default.

Copper, a key input for construction, power, and manufacturing, nevertheless remained near multi-month highs, supported by tightening inventories in London and constrained global supply.

Silver steadied around $62.5 per ounce on Monday, hovering near record highs and up more than 100% year-to-date.

The rally has been supported by tightening inventories, robust industrial demand, and the metal’s inclusion on the US critical minerals list. Demand has been particularly strong from the solar, electric vehicle, and data center sectors.

Additional support came from strong ETF inflows and retail buying, reinforcing expectations of a market deficit next year.

Silver also benefited from a softer dollar following last week’s Federal Reserve rate cut, although prospects for further easing in 2026 remain uncertain.

Despite these gains, silver pulled back over 2% on Friday amid analyst warnings about stretched valuations relative to gold and potential impacts from US tariff exemptions.

Silver steadied around $62.5 per ounce on Monday, hovering near record highs and up more than 100% year-to-date.

The rally has been supported by tightening inventories, robust industrial demand, and the metal’s inclusion on the US critical minerals list. Demand has been particularly strong from the solar, electric vehicle, and data center sectors.

Additional support came from strong ETF inflows and retail buying, reinforcing expectations of a market deficit next year.

Silver also benefited from a softer dollar following last week’s Federal Reserve rate cut, although prospects for further easing in 2026 remain uncertain.

Despite these gains, silver pulled back over 2% on Friday amid analyst warnings about stretched valuations relative to gold and potential impacts from US tariff exemptions.