Iron ore extends losses on weak demand outlook

Iron ore futures declined on Tuesday as subdued steel demand and cautious purchasing by Chinese mills continued to pressure the market, while expectations of rising global supply kept sentiment weak.

Market insiders said heavy summer rainfall and typhoons in parts of China continued to slow downstream construction activity, prompting steel mills to purchase raw materials only on an as-needed basis. Spot trading remained subdued as mills maintained a cautious approach amid soft finished steel demand.

On the supply side, increasing seaborne shipments from major exporters continued to cap any upside in prices. Although iron ore inventories at major Chinese ports remained on a destocking trend, market participants said the anticipated ramp-up of Guinea’s Simandou iron ore project continued to weigh on the longer-term supply outlook.

Meanwhile, increased blast furnace maintenance across Chinese steel mills is expected to curb hot metal production in the coming weeks, reducing near-term demand for iron ore. Analysts expect prices to remain range-bound with a weaker bias as the market balances declining port inventories against soft steel demand and ample global supply.

On the Dalian Commodity Exchange, the most-traded September iron ore contract fell 1.12pct to 749 yuan (USD 110.6) per ton. Coking coal futures declined 0.43pct to 1,275 yuan (USD 188) per ton, while coke futures fell 1.47pct to 1,837 yuan (USD 271) per ton.

On the Shanghai Futures Exchange, rebar futures declined 0.29pct to 3,095 yuan (USD 457) per ton. HRC futures fell 0.27pct to 3,297 yuan (USD 487) per ton. Wire rod futures slipped 0.24pct to 3,325 yuan (USD 491) per ton, while stainless steel futures rose 0.65pct to 14,800 yuan (USD 2,186) per ton.

1 USD / 6.77 yuan