Iron ore futures retreat as demand concerns weigh on sentiment

China’s iron ore futures dropped on Wednesday as concerns over steel demand limited buying interest.

Market sentiment has cooled following the recent rally, with traders increasingly focused on the gap between expectations for stronger September-October demand and actual steel consumption. Chinese steel traders pointed out that most mills are maintaining their base offers, but buying activity remains cautious.

Coking coal, which boosted the ferrous complex in the past few sessions, dropped on expectations of improving coal supply. Despite today’s decline, analysts expect coking coal to remain the main source of cost support in the near term, as mine restarts remain slow amid continued safety controls, keeping effective supply tight and inventories at mines low. However, expectations of improving supply have started to put some downward pressure on prices.

On the Dalian Commodity Exchange, the most-traded iron ore contract fell 1.11pct from the previous night session to 714 yuan (USD 106.2) per ton. Coke futures declined 1.02pct to 2,181.5 yuan (USD 325) per ton, while coking coal futures fell 1.97pct to 1,663.5 yuan (USD 248) per ton.

On the Shanghai Futures Exchange, HRC futures fell 0.74pct to 3,365 yuan (USD 501) per ton, while rebar futures declined 1.04pct to 3,142 yuan (USD 468) per ton. Wire rod futures decreased 0.70pct to 3,381 yuan (USD 503) per ton, while stainless steel futures fell 0.54pct to 13,765 yuan (USD 2,048) per ton.

1 USD / 6.72 yuan