Iron ore futures declined on Tuesday as market sentiment weakened following reports of stricter steel capacity control measures in China.
China’s Ministry of Industry and Information Technology (MIIT) is planning to tighten steel capacity replacement regulations by introducing a minimum nationwide replacement ratio of 1.5:1. Under the proposed rules, at least 1.5 tons of outdated steelmaking capacity would need to be eliminated for every 1 ton of new capacity added.
The move is part of China’s ongoing supply-side reform efforts aimed at curbing excess capacity and limiting disorderly competition in the steel sector. Market participants said the stricter rules could reduce overall steel production capacity and weaken iron ore demand in the longer term. However, some analysts remain skeptical about the implementation of the measures, noting that previous capacity reduction plans had limited impact.
Chinese steel traders said steel mill margins remain at relatively healthy levels, supporting near-term production activity and providing some support to iron ore demand. Recent declines in iron ore prices were also seen encouraging restocking activity, while some mills are expected to resume production following maintenance shutdowns.
On the Dalian Commodity Exchange, the most-traded September iron ore contract declined by 0.87pct to yuan 798.5 (USD 117.3) per ton. Coking coal and coke futures fell by 0.49pct and 0.78pct to yuan 1,221 (USD 179) and yuan 1,782 (USD 262) per ton, respectively.
On the Shanghai Futures Exchange, rebar futures slipped by 0.53pct to yuan 3,204 (USD 471) per ton, while HRC futures declined by 0.32pct to yuan 3,428 (USD 504) per ton. Wire rod futures decreased by 0.33pct to yuan 3,349 (USD 492) per ton, while stainless steel futures remained nearly unchanged at yuan 14,710 (USD 2,161) per ton.
1 USD / 6.8 yuan
| Item | Closing Price (in yuan) | Difference from Night Session (pct) | Difference from Previous Morning Session (pct) |
|---|---|---|---|
| Wire Rod | 3,349.00 | ▼ -0.33 | ▲ 0.03 |
| Hot Rolled Coils | 3,428.00 | ▼ -0.32 | ▼ -0.03 |
| Rebar | 3,204.00 | ▼ -0.53 | ▼ -0.06 |
| Stainless Steel | 14,710.00 | ▲ 0.03 | ▲ 0.20 |
| Iron ore | 798.50 | ▼ -0.87 | ▼ -0.56 |
| Coke | 1,782.00 | ▼ -0.78 | ▲ 0.59 |
| Coking Coal | 1,221.00 | ▼ -0.49 | ▲ 1.02 |