Iron ore declines as demand concerns cloud outlook

Iron ore futures fell on Friday as abundant supply and weakening steel demand continued to weigh on market sentiment.

The market remained under pressure from high iron ore inventories at Chinese ports. Market insiders said the oversupply situation has continued to limit any meaningful recovery in prices.

Steel demand prospects also weakened further as construction activity in China slowed due to persistent rainfall and summer heat, reducing steel consumption during the traditional off-season.

Chinese steel traders noted that demand softened during the week while steel production remained relatively stable, resulting in excess supply in the finished steel market and continued pressure on steel prices. Some traders also reported slower export activity as Chinese authorities intensified inspections of steel cargoes at Caofeidian and Jingtang ports over suspected VAT-related issues, leading to customs clearance delays and port congestion.

Meanwhile, rising coking coal and coke prices have further squeezed Chinese steelmakers’ margins, reducing profitability and potentially affecting raw material purchasing activity in the coming weeks.

On the Dalian Commodity Exchange, the most-traded September iron ore contract fell 0.33pct to 764 yuan (USD 112.9) per ton, down 0.26pct compared with the close of last Friday’s morning session.

Coking coal and coke futures rose 0.81pct and 3.56pct to 1,370.5 yuan (USD 203) per ton and 2,078 yuan (USD 307) per ton, respectively.

On the Shanghai Futures Exchange, rebar futures increased 0.41pct to 3,178 yuan (USD 470) per ton, while HRC futures gained 0.42pct to 3,379 yuan (USD 500) per ton. Wire rod futures edged higher to 3,377 yuan (USD 500) per ton, while stainless steel futures climbed 1.94pct to 14,685 yuan (USD 2,171) per ton.

1 USD / 6.76 yuan