Iron ore steadies as resilient steel output offsets bearish outlook

Iron ore futures were little changed on Thursday as resilient Chinese steel production and a weekly drawdown in port-side inventories helped offset concerns over the medium-term demand outlook.

According to the China Iron and Steel Association (CISA), daily crude steel output among its member mills remained broadly stable at 2.02 mln tons during the first ten days of July compared with the previous ten-day period, although production was 3.6pct lower than a year earlier.

Market insiders said the recent decline in iron ore inventories at Chinese ports also indicates that iron ore demand has remained relatively resilient despite weak downstream steel consumption.

In the spot market, Chinese steel traders said demand remained broadly stable, while the buildup in finished steel inventories slowed this week after rising for the past two weeks. However, they cautioned that it was too early to conclude the market had turned around, with demand fundamentals and overall market sentiment remaining weak.

Analysts also noted that some Chinese steel mills have brought forward maintenance schedules, which could weigh on steel production and iron ore demand in the coming weeks.

On the Dalian Commodity Exchange, the most-traded September iron ore contract was unchanged at 759.5 yuan (USD 112.2) per ton. Coking coal and coke futures declined 0.32pct and 0.77pct to 1,261 yuan (USD 186) per ton and 1,864.5 yuan (USD 275) per ton, respectively.

On the Shanghai Futures Exchange, rebar futures rose 0.26pct to 3,115 yuan (USD 460) per ton, while HRC futures edged up to 3,324 yuan (USD 491) per ton. Wire rod futures declined 0.21pct to 3,327 yuan (USD 492) per ton, while stainless steel futures advanced 1.2pct to 14,730 yuan (USD 2,176) per ton.

1 USD / 6.76 yuan