Iron ore futures continued to decline on Wednesday as rising supply, weakening steel demand and deteriorating mill margins weighed on market sentiment.
Market insiders said Chinese steel production may be nearing a peak, with high output continuing to pressure finished steel prices and erode mill margins. Higher raw material costs, particularly coke, have added further pressure on steelmakers’ profitability.
At the same time, slowing steel consumption, high port-side iron ore inventories and increasing iron ore shipments have reinforced the bearish outlook for the raw material.
Market sentiment was also affected by growing trade barriers against Chinese steel exports. Traders noted that Chinese steel exports may struggle to match last year’s record levels as protectionist measures continue to increase in key markets. Some Chinese steel traders also pointed to China’s steel export licensing requirements and expectations of weaker domestic steel consumption as additional challenges for the sector.
Chinese steel traders said finished steel prices are likely to remain under pressure in the near term due to the imbalance between supply and demand. However, some market insiders noted that a potential easing of tensions between the United States and Iran could improve steel trade flows to the Middle East, one of the key export destinations for Chinese steel products.
On the Dalian Commodity Exchange, the most-traded September iron ore contract fell 2.61pct to 747.5 yuan (USD 110.6) per ton. Coking coal and coke futures declined 0.33pct and 1.07pct to 1,342.5 yuan (USD 199) per ton and 2,073 yuan (USD 307) per ton, respectively.
On the Shanghai Futures Exchange, rebar futures decreased 0.6pct to 3,155 yuan (USD 467) per ton, while HRC futures fell 0.47pct to 3,371 yuan (USD 499) per ton. Wire rod futures dropped 0.62pct to 3,354 yuan (USD 496) per ton, while stainless steel futures gained 0.7pct to 15,150 yuan (USD 2,242) per ton.
1 USD / 6.75 yuan
| Item | Closing Price (in yuan) | Difference from Night Session (pct) | Difference from Previous Morning Session (pct) |
|---|---|---|---|
| Wire Rod | 3,354.00 | ▼ -0.62 | ▼ -0.66 |
| Hot Rolled Coils | 3,371.00 | ▼ -0.47 | ▼ -0.33 |
| Rebar | 3,155.00 | ▼ -0.60 | ▼ -0.44 |
| Stainless Steel | 15,150.00 | ▲ 0.70 | ▼ -0.59 |
| Iron ore | 747.50 | ▼ -2.61 | ▼ -1.94 |
| Coke | 2,073.00 | ▼ -1.07 | ▼ -0.51 |
| Coking Coal | 1,342.50 | ▼ -0.33 | ▼ -0.04 |