Iron ore futures recover but demand concerns persist

Iron ore futures recovered on Wednesday after falling to one-year lows earlier this week, supported by relatively stable demand. However, weak seasonal steel demand and continued supply pressure kept gains limited.

Market insiders said near-term iron ore demand remained relatively stable, with steel production staying at comparatively high levels in the short term.

Coking coal and coke futures posted stronger gains, supported by expectations of tighter supply following coordinated production cuts by coke producers in several Chinese regions. The stronger raw material market also provided some support to iron ore sentiment.

Supply pressure remained a key concern, with strong arrivals and high Chinese port inventories keeping the iron ore market well supplied. Mills also remained cautious over restocking amid weak finished steel demand and compressed margins, with purchases largely based on immediate production requirements.

Chinese traders said the domestic steel market showed some improvement following the recent correction, with limited speculative buying returning at lower price levels.

On the Dalian Commodity Exchange, the most-traded September iron ore contract rose 0.93pct to 706 yuan (USD 104.5) per ton. Coking coal futures gained 3.35pct to 1,233 yuan (USD 183) per ton, while coke futures increased 1.88pct to 1,793 yuan (USD 266) per ton.

On the Shanghai Futures Exchange, wire rod futures rose 0.46pct to 3,270 yuan (USD 484) per ton, HRC futures gained 0.31pct to 3,207 yuan (USD 475) per ton and rebar futures edged 0.23pct higher to 2,990 yuan (USD 443) per ton. Stainless steel futures fell 2.36pct to 14,475 yuan (USD 2,144) per ton.

1 USD / 6.75 yuan