Iron ore futures remain under pressure as weak PMI weighs on sentiment

Iron ore futures extended losses on Friday, hovering near one-year lows after weaker-than-expected Chinese manufacturing data reinforced concerns over slowing steel demand, while rising port inventories and ample seaborne supply continued to pressure the market.

China’s official manufacturing Purchasing Managers’ Index (PMI) fell to 49.2 in July from 50.3 in June, slipping back into contraction territory. Market insiders said the weaker factory activity, combined with a slowdown in the construction sector and subdued summer steel demand, weighed on sentiment across the ferrous complex.

Fundamentals also remained bearish as iron ore inventories at major Chinese ports continued to build for a second consecutive week, reflecting steady arrivals from major exporters and slower consumption by steel mills. Market sources said raw material demand remains under pressure as mills continue to trim production and lower steel prices to stimulate sales.

Chinese traders said the domestic steel market remained sluggish, with mills reducing daily base prices amid slow order intake. Export activity also remained subdued as weak overseas demand made it difficult to conclude new deals. They added that July was a challenging month for the steel sector, with oversupply and weak seasonal demand keeping pressure on both domestic and export markets.

On the Dalian Commodity Exchange, the most-traded September iron ore contract fell 1.31pct to 716 yuan (USD 106) per ton. Coking coal futures declined 4.41pct to 1,181 yuan (USD 175) per ton, while coke futures dropped 3.13pct to 1,767 yuan (USD 262) per ton.

On the Shanghai Futures Exchange, HRC futures fell 1.14pct to 3,220 yuan (USD 477) per ton, rebar futures declined 0.76pct to 3,004 yuan (USD 445) per ton, while wire rod futures edged 0.18pct higher to 3,264 yuan (USD 483) per ton. Stainless steel futures also gained 0.27pct to 14,635 yuan (USD 2,167) per ton.

1 USD / 6.75 yuan