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China’s iron ore futures strengthened on Monday, supported by tighter short-term supply, improving market sentiment and expectations of stronger steel demand ahead of the September peak season.
China’s iron ore arrivals fell sharply on a weekly basis as typhoon-related disruptions affected ports, easing near-term supply pressure. Market sentiment was also supported by expectations that construction activity will improve ahead of the traditional September-October peak season.
Rising dry bulk freight rates and higher oil prices are providing additional cost support to iron ore, while surging coking coal and coke prices continue to squeeze steel mill margins. Coking coal supply remains tight, with mine output recovering slowly and producers showing limited willingness to sell at current levels.
Positive macro data also supported commodity markets. China’s manufacturing PMI improved to 49.8 in August from 49.2 in July, according to the NBS. The production and new orders indices returned to expansion territory at 50.4 and 50.6, respectively, although the headline PMI remained below 50.
Chinese steel traders said the stronger PMI and expanding new orders index reinforced expectations of a seasonal improvement in demand. Domestic steel prices increased by around 20-30 yuan per ton, while some mills reportedly stopped offering in the afternoon, fuelling expectations of further price increases.
On the Dalian Commodity Exchange, the most-traded iron ore contract was up 0.76pct at 727 yuan (USD 108.1) per ton. Coke futures rose 4.28pct to 2,241.5 yuan (USD 333) per ton, while coking coal futures increased 6.53pct to 1,729 yuan (USD 257) per ton.
On the Shanghai Futures Exchange, HRC futures increased 1.46pct to 3,412 yuan (USD 508) per ton, while rebar futures rose 1.09pct to 3,143 yuan (USD 468) per ton. Wire rod futures gained 0.44pct to 3,427 yuan (USD 510) per ton, while stainless steel futures declined 0.61pct to 13,890 yuan (USD 2,066) per ton.
1 USD / 6.72 yuan
| Item | Closing Price (in yuan) | Difference from Night Session (pct) | Difference from Previous Morning Session (pct) |
|---|---|---|---|
| Wire Rod | 3,427.00 | ▲ 0.44 | ▲ 2.92 |
| Hot Rolled Coils | 3,412.00 | ▲ 1.46 | ▲ 1.20 |
| Rebar | 3,143.00 | ▲ 1.09 | ▲ 0.99 |
| Stainless Steel | 13,890.00 | ▼ -0.61 | ▼ -0.86 |
| Iron ore | 727.00 | ▲ 0.76 | ▲ 0.55 |
| Coke | 2,241.50 | ▲ 4.28 | ▲ 3.93 |
| Coking Coal | 1,729.00 | ▲ 6.53 | ▲ 5.78 |