Iron ore futures extend gains as Beijing targets deflation and industrial overcapacity

Iron ore futures rose further on Friday, supported by firm near-term fundamentals and renewed policy backing from Beijing.

Higher production by blast furnace-based steelmakers, driven by strong profit margins, continued to bolster iron ore prices. Steel demand also remained resilient despite the typical seasonal slowdown, adding to the market’s momentum.

Investor sentiment improved after top Chinese officials pledged to curb aggressive price-cutting and tackle overcapacity in heavy industries, measures aimed at easing deflationary pressures. At a key economic meeting chaired by President Xi Jinping earlier this week, policymakers reaffirmed plans to eliminate outdated industrial capacity, renewing focus on China’s oversupplied steel sector.

However, gains were tempered by environmental curbs on sintering operations in Tangshan and broader macroeconomic challenges, including the ongoing property sector crisis and growing global protectionism targeting Chinese steel exports.

On the Dalian Commodity Exchange, the most-active September iron ore contract rose 0.62pct to 732.5 yuan (USD 102.2) per ton, up 2.2pct from last Friday morning’s session.

Coke and coking coal futures slipped 0.42pct and 1.06pct, settling at 1,433 yuan (USD 200) and 839.5 yuan (USD 117) per ton, respectively.

On the Shanghai Futures Exchange, rebar and HRC futures climbed over 0.2pct to 3,072 yuan (USD 429) and 3,201 yuan (USD 447) per ton. Wire rod edged down 0.09pct to 3,325 yuan (USD 464), while stainless steel gained 0.39pct to 12,730 yuan (USD 1,776) per ton.

With the exception of stainless steel, all major steel and steelmaking raw material futures posted losses compared to the closing of previous morning’s session.

1 USD / 7.16 yuan