Iron ore holds firm as supply risks offset weak steel demand

Iron ore futures edged higher on Friday as tighter port supplies and continued inventory drawdowns in China lent support to the market, although weak downstream steel demand continued to cap gains.

Market insiders said weather-related disruptions to iron ore arrivals at Chinese ports, coupled with ongoing inventory destocking, helped underpin prices despite subdued seasonal steel consumption.

Supply-side concerns also supported the market, as planned industrial action at BHP’s Port Hedland Bulk Export Terminal raised concerns over potential disruptions to iron ore shipments, while continued uncertainty over shipping routes following the US-Iran conflict in the Middle East helped prevent a sharper decline in prices.

However, traders remained cautious, noting that sluggish spot steel sales and weak raw material purchasing by steel mills continued to weigh on overall market sentiment.

Analysts said steelmakers remained under pressure from thin margins and soft finished steel demand, limiting their willingness to increase raw material purchases. While lower iron ore availability has provided near-term support, concerns over slowing steel production continue to cloud the medium-term demand outlook.

On the Dalian Commodity Exchange, the most-traded September iron ore contract rose 0.53pct to 762 yuan (USD 112.4) per ton. Coking coal and coke futures fell 0.28pct and 0.35pct to 1,260.5 yuan (USD 186) per ton and 1,864 yuan (USD 275) per ton, respectively.

On the Shanghai Futures Exchange, rebar futures edged up 0.06pct to 3,112 yuan (USD 459) per ton. HRC futures slipped 0.15pct to 3,318 yuan (USD 490) per ton. Wire rod futures increased 0.06pct to 3,320 yuan (USD 490) per ton, while stainless steel futures were unchanged at 14,650 yuan (USD 2,161) per ton.

1 USD / 6.77 yuan