Iron ore futures strengthen on improving market sentiment

China’s iron ore futures strengthened on Wednesday as improving expectations for steel production provided support to the market, although rising iron ore supply limited the upside.

Market sentiment improved as steel production appears to have reached a near-term bottom, with expectations of firmer iron ore demand if steel mills increase output ahead of the traditional September-October peak season, when construction and manufacturing activity typically strengthen.

Typhoon Narra, which made landfalls in Hainan and Guangdong, also disrupted shipping routes in southern China, providing temporary support to iron ore prices by affecting maritime logistics.

However, rising supply and high port-side inventories remain key headwinds for the longer-term iron ore outlook.

Chinese steel traders said the domestic steel market remained mixed after the recent price gains, with downstream demand showing limited improvement. The near-term positivity would depend on increase in steel demand in the near future, Chinese steel trader commented.

On the Dalian Commodity Exchange, the most-traded iron ore contract was up 0.49pct at 720 yuan (USD 107.1) per ton. Coke futures fell 2.7pct to 2,109.5 yuan (USD 314) per ton, while coking coal futures declined 1.13pct to 1,574 yuan (USD 234) per ton.

On the Shanghai Futures Exchange, HRC futures fell 0.24pct to 3,342 yuan (USD 497) per ton, while rebar futures rose 0.20pct to 3,076 yuan (USD 458) per ton. Wire rod futures increased 0.24pct to 3,291 yuan (USD 490) per ton, while stainless steel futures gained 0.53pct to 14,225 yuan (USD 2,116) per ton.

1 USD / 6.72 yuan