Iron ore futures consolidate as weak demand weighs on market

China’s iron ore futures were largely unchanged on Thursday as expectations of tighter Brazilian supply and high freight rates were offset by weakening steel demand and high iron ore inventories at Chinese ports.

Market insiders said pre-holiday restocking has largely been completed, with buying activity turning sluggish ahead of the holidays. Steel production is likely to decline in the near term due to weak steel demand, pointing to weaker iron ore consumption.

On the supply side, expectations of slightly lower Brazilian shipments and higher ocean freight rates continue to provide some support. However, high port-side inventories mean the fundamental outlook for iron ore remains bearish.

Chinese steel traders said the market is following the pre-holiday stocking pattern, with buying appetite weakening today in the domestic market. Steel export prices were stable on an FOB basis, while rising freight uncertainty and congestion are adding to costs for exporters.

On the Dalian Commodity Exchange, the most-traded iron ore contract was unchanged at 713.5 yuan (USD 106.3) per ton. Coking coal fell 0.46 pct to 1,509 yuan (USD 225) per ton, while coke declined slightly to 1,974.5 yuan (USD 294) per ton.

On the Shanghai Futures Exchange, HRC futures fell 0.18 pct to 3,298 yuan (USD 491) per ton, while rebar edged higher to 3,118 yuan (USD 464) per ton. Wire rod fell 1.32 pct to 3,360 yuan (USD 500) per ton, while stainless steel declined 0.40 pct to 13,815 yuan (USD 2,058) per ton.

Both the Dalian Commodity Exchange and Shanghai Futures Exchange will be closed on Friday, September 25, for the Mid-Autumn Festival holiday.

1 USD / 6.71 yuan