Iron ore futures hit fresh one-year low on weak demand

Iron ore futures fell below the 700 yuan per ton mark on Monday, reaching their lowest level in more than a year as abundant seaborne supply, weak seasonal steel demand and falling steel prices continued to weigh on market sentiment.

Market insiders said iron ore fundamentals remained weak, with supply continuing to outpace demand. Strong shipments from major exporters and high port arrivals have kept inventories elevated, while steel mills continued to limit raw material purchases amid weak margins and subdued finished steel demand.

Chinese traders said the domestic steel market remained under pressure, with futures extending losses and spot steel prices falling further as weak end-user demand continued to erode market confidence. They added that mills may be forced to implement further production cuts if the current downturn persists, while export offers are expected to decline further in response to the weaker domestic market.

Market sentiment was also affected by reports that several major commodity trading houses suspended new business with a leading iron ore trader following concerns over trade documentation, prompting expectations of tighter credit conditions and higher margin requirements. However, traders said no significant disruption to physical iron ore liquidity has been observed so far.

On the Dalian Commodity Exchange, the most-traded September iron ore contract fell 2.85pct to 698 yuan (USD 103.3) per ton, its lowest level in more than a year. Coking coal futures declined 1.21pct to 1,182 yuan (USD 175) per ton, while coke futures fell 1.74pct to 1,753 yuan (USD 260) per ton.

On the Shanghai Futures Exchange, rebar futures dropped 1.23pct to 2,976 yuan (USD 441) per ton, HRC futures declined 1.02pct to 3,197 yuan (USD 473) per ton, while wire rod futures slipped 0.18pct to 3,260 yuan (USD 483) per ton. Stainless steel futures also weakened, falling 1.30pct to 14,470 yuan (USD 2,143) per ton.

1 USD / 6.75 yuan