Iron ore futures fall as weak steel margins weigh on demand

China’s iron ore futures fell on Thursday as weak steel mill margins continued to weigh on demand sentiment.

Market insiders said Chinese steel mills remain cautious about iron ore restocking, with squeezed margins prompting some producers to consider production cuts. Additionally, expectations for the September-October peak season have yet to translate into a clear improvement in demand.

The iron ore market is also being affected by tighter trading measures introduced by the Dalian Commodity Exchange to curb excessive speculation ahead of the upcoming holidays.

Chinese steel traders described the market as slightly weaker, with local steel demand showing limited improvement. However, steel inventories held by traders have continued to decline, providing some support to market sentiment. Baosteel’s decision to raise its October domestic steel prices for most flat steel products by 200 yuan (USD 30) per ton also signals firmer expectations among major mills.

On the Dalian Commodity Exchange, the most-traded iron ore contract fell 0.95pct to 730.5 yuan (USD 108.8) per ton. Coking coal futures declined 0.78pct to 1,649 yuan (USD 246) per ton, while coke futures fell 1.27pct to 2,136.5 yuan (USD 318) per ton.

On the Shanghai Futures Exchange, HRC futures fell 0.47pct to 3,365 yuan (USD 501) per ton, while rebar futures declined 0.57pct to 3,146 yuan (USD 469) per ton. Wire rod futures fell 0.67pct to 3,393 yuan (USD 506) per ton, while stainless steel futures edged up 0.11pct to 13,805 yuan (USD 2,057) per ton.

1 USD / 6.71 yuan