Iron ore recovers on restocking, but outlook remains weak

Iron ore futures rebounded on Wednesday, supported by short-term restocking activity by Chinese steel mills following recent price declines, although the broader market outlook remained bearish.

Market insiders said lower iron ore prices encouraged some mills to replenish inventories, providing temporary support to futures. However, sentiment remains cautious as weak steel demand continues to pressure mill profitability.

In recent weeks, iron ore prices have come under pressure from the seasonal slowdown in steel consumption, with Chinese steelmakers facing shrinking margins. Several mills are reportedly bringing forward maintenance schedules, which could reduce steel output and limit iron ore demand in the coming months.

Meanwhile, Chinese steel traders reported little change in spot market conditions, with both domestic and export demand remaining subdued. Market insiders said the absence of strong demand-side drivers continues to cap any significant recovery in steel and raw material prices.

Supply-side pressure also remains a key concern. Major global iron ore miners are maintaining high shipment volumes to meet first-half production targets, raising concerns over potential inventory accumulation during a traditionally weak consumption period.

On the Dalian Commodity Exchange, the most-traded September iron ore contract rose 0.74pct to 744 yuan (USD 109.4) per ton. Coking coal and coke futures declined by 1.03pct and 0.31pct to 1,245.5 yuan (USD 183) per ton and 1,947.5 yuan (USD 286) per ton, respectively.

On the Shanghai Futures Exchange, rebar and HRC futures were largely unchanged at 3,111 yuan (USD 457) per ton and 3,325 yuan (USD 489) per ton, respectively. Wire rod futures edged up to 3,371 yuan (USD 495) per ton, while stainless steel futures fell 1.57pct to 14,695 yuan (USD 2,160) per ton.

1 USD / 6.8 yuan