Iron ore futures remain weak as cautious buying limits recovery

Iron ore futures were largely stable on Monday as weak steel mill profitability, ample supply and cautious buying continued to weigh on the market. Expectations of post-holiday restocking provided some support, but soft downstream demand has yet to translate into stronger iron ore purchases.

Chinese steelmakers remain reluctant to increase raw material buying despite the first round of coke price cuts improving mill margins. With supply still comfortable and port inventories under pressure from high global shipments, prices are expected to remain rangebound at low levels, according to the market insiders.

Daily crude steel output among member mills of the China Iron and Steel Association (CISA) fell by 2.1pct to an average of 1.88 mln tons per day during September 21-30, compared with the preceding ten-day period.

Chinese steel traders described domestic steel prices as broadly unchanged, with firm cost support offsetting limited changes in end-user demand. Steel mill output was reported to be stable, while production maintenance remained limited. Export offers were also largely unchanged, although some mills reduced October allocations as domestic buying improved selectively.

On the Dalian Commodity Exchange, the most-traded iron ore contract inched lower to 683 yuan (USD 102) per ton. Coking coal rose 1.88pct to 1,546 yuan (USD 231) per ton, while coke gained 1.53pct to 2,022.5 yuan (USD 302) per ton.

On the Shanghai Futures Exchange, rebar increased 0.32pct to 3,090 yuan (USD 462) per ton, while HRC edged up 0.12pct to 3,255 yuan (USD 486) per ton. Wire rod gained 0.53pct to 3,428 yuan (USD 512) per ton, while stainless steel fell 0.89pct to 13,430 yuan (USD 2,007) per ton.

1 USD / 6.69 yuan